UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-5471
GLOBAL MARINE INC.
(Exact name of registrant as specified in its charter)
Delaware 95-1849298
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 N. Eldridge Parkway, Houston, Texas 77079-4493
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (281) 596-5100
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of the registrant's Common Stock, par value $.10 per
share, outstanding as of July 31, 1999 was 174,184,901.
(PAGE)
GLOBAL MARINE INC.
TABLE OF CONTENTS TO FORM 10-Q
QUARTER ENDED JUNE 30, 1999
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Report of Independent Accountants 2
Condensed Consolidated Statement of Income for the
Three and Six Months Ended June 30, 1999 and 1998 3
Condensed Consolidated Balance Sheet as of June 30, 1999
and December 31, 1998 4
Condensed Consolidated Statement of Cash Flows for the
Six Months Ended June 30, 1999 and 1998 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 20
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURE 22
(PAGE)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Global Marine Inc.
We have made a review of the condensed consolidated balance sheet of Global
Marine Inc. and subsidiaries as of June 30, 1999, the related condensed
consolidated statements of income for the three and six-month periods ended
June 30, 1999 and 1998, and the consolidated statement of cash flows for the
six months ended June 30, 1999 and 1998. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1998, and the
related consolidated statements of income, stockholders' equity, and cash
flows for the year then ended (not presented herein); and in our report dated
February 22, 1999, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of December 31, 1998,
is fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
August 10, 1999
(PAGE)
<TABLE>
GLOBAL MARINE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues:
Contract drilling $140.7 $196.7 $297.7 $373.2
Drilling management 53.4 158.2 123.6 255.6
Oil and gas 1.6 1.1 2.4 2.3
------ ------ ------ ------
Total revenues 195.7 356.0 423.7 631.1
Expenses:
Contract drilling 69.4 66.2 142.1 126.9
Drilling management 52.7 157.1 125.4 254.3
Oil and gas .8 .5 1.3 1.0
Depreciation, depletion,
and amortization 21.9 25.9 43.3 46.5
General and administrative 6.0 5.0 11.9 10.4
------ ------ ------ ------
Total operating expenses 150.8 254.7 324.0 439.1
------ ------ ------ ------
Operating income 44.9 101.3 99.7 192.0
Other income (expense):
Interest expense (13.6) (12.0) (27.0) (20.4)
Interest capitalized 5.9 5.0 10.0 10.2
Interest income .7 1.0 1.5 1.9
------ ------ ------ ------
Total other income (expense) (7.0) (6.0) (15.5) (8.3)
------ ------ ------ ------
Income before income taxes 37.9 95.3 84.2 183.7
Provision for income taxes:
Current tax provision (benefit) (2.4) 6.5 (.4) 11.6
Deferred tax provision 12.1 15.4 19.6 30.5
------ ------ ------ ------
Total provision for income taxes 9.7 21.9 19.2 42.1
------ ------ ------ ------
Net income $ 28.2 $ 73.4 $ 65.0 $141.6
====== ====== ====== ======
Earnings per share:
Basic $ 0.16 $ 0.42 $ 0.37 $ 0.82
Diluted $ 0.16 $ 0.42 $ 0.37 $ 0.80
</TABLE>
See notes to condensed consolidated financial statements.
(PAGE)
<TABLE>
GLOBAL MARINE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
($ in millions)
ASSETS
<CAPTION>
June 30, December 31,
1999 1998
------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 19.1 $ 56.9
Accounts receivable, net of allowances 121.5 163.0
Costs incurred on turnkey drilling
contracts in progress 12.4 6.6
Future income tax benefits - 20.0
Prepaid expenses 9.0 15.6
Other current assets 7.6 7.3
-------- --------
Total current assets 169.6 269.4
Properties and equipment:
Rigs and drilling equipment, less accumulated
depreciation of $411.1 at June 30, 1999 and
$371.9 at December 31, 1998 1,246.2 1,262.6
Construction in progress 387.2 236.8
Oil and gas properties, full cost method, less
accumulated depreciation, depletion, and
amortization of $25.5 at June 30, 1999 and
$24.3 at December 31, 1998 15.4 12.7
-------- --------
Net properties and equipment 1,648.8 1,512.1
Future income tax benefits 92.7 89.8
Other assets 93.4 100.3
-------- --------
Total assets $2,004.5 $1,971.6
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
(PAGE)
<TABLE>
GLOBAL MARINE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (Continued)
($ in millions)
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
June 30, December 31,
1999 1998
------- -----------
<S> <C> <C>
Current liabilities:
Accounts payable $ 75.1 $ 99.0
Accrued compensation and related employee costs 17.6 22.5
Accrued income taxes 4.2 12.2
Accrued interest 9.4 9.3
Other accrued liabilities 11.1 9.4
-------- --------
Total current liabilities 117.4 152.4
Long-term debt 740.7 750.7
Capital lease obligation 18.5 17.7
Other long-term liabilities 17.9 10.4
Shareholders' equity:
Preferred stock, $0.01 par value, 10 million
shares authorized, no shares issued or
outstanding - -
Common stock, $0.10 par value, 300 million shares
authorized, 174,144,996 shares and 173,368,384
shares issued and outstanding at June 30, 1999
and December 31, 1998, respectively 17.4 17.3
Additional paid-in capital 326.0 321.5
Retained earnings 766.6 701.6
-------- --------
Total shareholders' equity 1,110.0 1,040.4
-------- --------
Total liabilities and shareholders' equity $2,004.5 $1,971.6
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
(PAGE)
<TABLE>
GLOBAL MARINE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
<CAPTION>
Six Months Ended
June 30,
----------------
1999 1998
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 65.0 $ 141.6
Adjustments to reconcile net income to net cash
flow provided by operating activities:
Depreciation, depletion, and amortization 43.3 46.5
Deferred income taxes 19.6 30.5
Decrease (increase) in accounts receivable 40.4 (55.5)
(Increase) decrease in costs incurred on
turnkey drilling contracts in progress (5.8) 1.2
Decrease (increase) in other current assets 6.6 (.8)
Decrease in noncurrent receivables 3.4 1.4
Decrease in accounts payable (23.9) (22.9)
Increase in accrued interest - 2.8
Decrease in other accrued liabilities (10.6) (18.4)
Other, net 11.0 .3
------- -------
Net cash flow provided by operating activities 149.0 126.7
Cash flows from investing activities:
Capital expenditures (180.3) (426.6)
Proceeds from sales of properties and equipment 2.1 2.8
Other (.3) -
------- -------
Net cash flow used in investing activities (178.5) (423.8)
Cash flows from financing activities:
Increases in long-term debt 70.0 496.0
Reductions of long-term debt (80.0) (240.0)
Proceeds from exercises of employee stock options 1.7 3.8
Other - (3.0)
------- -------
Net cash flow (used in) provided by financing
activities (8.3) 256.8
------- -------
Decrease in cash and cash equivalents (37.8) (40.3)
Cash and cash equivalents at beginning of period 56.9 78.9
------- -------
Cash and cash equivalents at end of period $ 19.1 $ 38.6
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
(PAGE)
GLOBAL MARINE INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
Note 1 - General
The financial statements reflect all adjustments which are, in the opinion of
management, necessary for a fair statement of the results for the interim
periods. Such adjustments are considered to be of a normal recurring nature
unless otherwise identified.
The year-end condensed consolidated balance sheet was derived from audited
financial statements but does not include all disclosures required by
generally accepted accounting principles. Certain reclassifications were
made to the prior-year period to conform to the current-period presentation,
with no effect on the consolidated financial position, results of operations,
or cash flows.
The term "Company" refers to Global Marine Inc. and, unless the context
otherwise requires, to the Company's consolidated subsidiaries.
These interim financial statements should be read in conjunction with the
Company's audited financial statements for the year ended December 31, 1998.
Note 2 - Change in Rig Service Lives
In December 1998, the Company conducted an evaluation of the service lives
of the rigs in its drilling fleet. Based on the results of the evaluation,
effective January 1, 1999, the Company increased the estimated useful lives
of its jackups and semisubmersibles to 30 years to better reflect their
estimated economic lives. Prior to the change, jackups were depreciated
over 25-year lives, and semisubmersibles generally were depreciated over
20-year lives. For the quarter ended June 30, 1999, the effect of the change
was to increase net income by $4.8 million and diluted earnings per share by
$0.03. For the six months ended June 30, 1999, the effect of the change was
to increase net income by $10.0 million and diluted earnings per share by
$0.06.
(PAGE)
Note 3 - Earnings per Share
A reconciliation of the numerators and denominators of the basic and diluted
per-share computations for net income follows:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
-------------------------- ------------------------
1999 1998 1999 1998
---------- ---------- ----------- ----------
($ in millions, except per share data)
<S> <C> <C> <C> <C>
Net income (numerator): $28.2 $73.4 $65.0 $141.6
===== ===== ===== ======
Shares (denominator):
Shares - Basic 173,836,006 172,948,809 173,653,556 172,770,698
Effect of employee
stock options 3,029,590 3,143,854 2,423,975 3,294,797
----------- ----------- ----------- -----------
Shares - Diluted 176,865,596 176,092,663 176,077,531 176,065,495
=========== =========== =========== ===========
Earnings per share:
Basic $0.16 $0.42 $0.37 $0.82
Diluted $0.16 $0.42 $0.37 $0.80
</TABLE>
(PAGE)
Note 4 - Segment and Geographic Information
Information by operating segment, together with reconciliations to the
consolidated totals, is presented in the following table:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1999 1998 1999 1998
------ ------ ------ ------
(In millions)
<S> <C> <C> <C> <C>
Revenues from external customers:
Contract drilling $140.7 $196.7 $297.7 $373.2
Drilling management services 53.4 158.2 123.6 255.6
Oil and gas 1.6 1.1 2.4 2.3
------ ------ ------ ------
Consolidated $195.7 $356.0 $423.7 $631.1
====== ====== ====== ======
Intersegment revenues:
Contract drilling $ .9 $ 6.0 $ 3.9 $ 11.0
Drilling management services 3.0 3.1 4.9 3.7
Intersegment eliminations (3.9) (9.1) (8.8) (14.7)
------ ------ ------ ------
Consolidated $ - $ - $ - $ -
====== ====== ====== ======
Total revenues:
Contract drilling $141.6 $202.7 $301.6 $384.2
Drilling management services 56.4 161.3 128.5 259.3
Oil and gas 1.6 1.1 2.4 2.3
Intersegment eliminations (3.9) (9.1) (8.8) (14.7)
------ ------ ------ ------
Consolidated $195.7 $356.0 $423.7 $631.1
====== ====== ====== ======
Operating income:
Contract drilling $ 50.5 $105.5 $114.4 $201.6
Drilling management services .7 1.0 (1.9) 1.1
Oil and gas .1 .2 (.1) .5
Corporate (6.4) (5.4) (12.7) (11.2)
------ ------ ------ ------
Consolidated $ 44.9 $101.3 $ 99.7 $192.0
====== ====== ====== ======
</TABLE>
(PAGE)
A reconciliation of segment operating income to consolidated income before
income taxes follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1999 1998 1999 1998
------ ------ ------ ------
(In millions)
<S> <C> <C> <C> <C>
Total segment operating income $ 51.3 $106.7 $112.4 $203.2
Corporate general and administrative
expenses (6.0) (5.0) (11.9) (10.4)
Corporate depreciation, depletion,
and amortization (.4) (.4) (.8) (.8)
------ ------ ------ ------
Consolidated operating income 44.9 101.3 99.7 192.0
Interest expense (13.6) (12.0) (27.0) (20.4)
Interest capitalized 5.9 5.0 10.0 10.2
Interest income .7 1.0 1.5 1.9
------ ------ ------ ------
Income before income taxes $ 37.9 $ 95.3 $ 84.2 $183.7
====== ====== ====== ======
</TABLE>
Note 5 - Contingencies
The Company is seeking to resolve a dispute with Sedco Forex Offshore ("Sedco")
with respect to a bareboat charter agreement for the drilling rig, Glomar Grand
Banks. The Company assumed rights to the bareboat charter at the time it
acquired ownership of the rig in July 1997. At issue are the date of
termination of the charter, the condition of the rig upon its return to the
Company, and Sedco's liability to pay additional dayrate. With regard to the
first issue, the Company has contended that the charter expired on January 20,
1998. The parties commenced arbitration proceedings in London in December
1997, and the arbitration panel ruled in favor of the Company on that issue.
With respect to the other issues, the Company contends Sedco is responsible
under the charter for paying the cost of certain repairs to the rig and for
paying a market dayrate for the period following termination of the charter
and while the rig was in the shipyard for repairs prior to its return to work
for another customer. Sedco completed using the rig for drilling on May 5,
1998, at which time the rig entered a shipyard to undergo the repairs at issue.
The Company completed the repairs on October 30, 1998, and mobilized the rig
to the east coast of Canada, where it has been operating for another customer
since December 1998. The arbitration hearing in London with regard to the
outstanding issues has been delayed until no earlier than the first quarter
of 2000. The Company has recorded a noncurrent receivable from Sedco in the
amount of $54.6 million at June 30, 1999, consisting of $31.4 million of costs
incurred in connection with rig repairs for which the Company contends Sedco
is responsible and $23.2 million of dayrate revenue recognized in 1998;
however, the Company expects the total claim against Sedco to exceed these
amounts.
The Company is involved in various lawsuits resulting from personal injury
and property damage. In the opinion of management, resolution of these
matters will not have a material adverse effect on the Company's results of
operations, financial position, or cash flows.
(PAGE)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
OPERATING RESULTS
Summary
Operating income decreased by $56.4 million to $44.9 million for the second
quarter of 1999 from $101.3 million for the second quarter of 1998. Operating
income decreased by $92.3 million to $99.7 million for the six months ended
June 30, 1999 from $192.0 million for the six months ended June 30, 1998. The
declines were primarily attributable to decreases in average dayrates and rig
utilization for contract drilling. The declines were partly offset by the
addition of three deep-water rigs to the contract drilling fleet since February
1998 and lower depreciation resulting from the increase in estimated rig
service lives.
Data relating to the Company's operations by business segment follows:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
-------------------------- --------------------------
% Increase % Increase
1999 1998 (Decrease) 1999 1998 (Decrease)
------ ------ ---------- ------ ------ ----------
($ in millions)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Contract drilling $141.6 $202.7 (30%) $301.6 $384.2 (21%)
Drilling management 56.4 161.3 (65%) 128.5 259.3 (50%)
Oil and gas 1.6 1.1 45% 2.4 2.3 4%
Less: Intersegment
revenues (3.9) (9.1) (57%) (8.8) (14.7) (40%)
------ ------ ------ ------
$195.7 $356.0 (45%) $423.7 $631.1 (33%)
====== ====== ====== ======
Operating income:
Contract drilling $ 50.5 $105.5 (52%) $114.4 $201.6 (43%)
Drilling management .7 1.0 (30%) (1.9) 1.1 na
Oil and gas .1 .2 (50%) (.1) .5 na
Corporate expenses (6.4) (5.4) 19% (12.7) (11.2) 13%
------ ------ ------ ------
$ 44.9 $101.3 (56%) $ 99.7 $192.0 (48%)
====== ====== ====== ======
</TABLE>
The weakness in oil prices throughout 1998 caused most oil and gas producers
to substantially reduce their 1999 drilling budgets as compared to 1998 levels.
Since year-end 1998, industry utilization rates for offshore drilling rigs in
all major worldwide markets have fallen from prior-year levels, and spot market
dayrates for most rig types in most geographic markets have fallen to near cash
break-even levels. As of August 9, 1999, seven of the Company's eight
deep-water rigs were operating under older contracts at dayrates higher than
current market rates. One of these rigs completes its current contract in
late August 1999, one becomes available in December 1999, two become available
in late 2000, and one becomes available in each of 2001, 2002, and 2003. At
August 9, 1999, the Company had a total of eight rigs that were idle, including
six with no immediate plans for work ("cold-stacked"), and it is possible that
the number of cold-stacked rigs could increase from current levels. Given the
current level of utilization and dayrates, the Company expects earnings in the
second half of 1999 to be significantly lower than its first-half earnings as
rigs, particularly those on long-term contracts in the North Sea and offshore
West Africa, come off contract and roll over to lower-rate contracts or become
idle.
Since January 1999, oil prices have risen significantly as a result of OPEC
production cuts, and natural gas prices have increased in anticipation of
tighter supplies. Recently, several independent oil and gas
(PAGE)
companies have reported plans for increased drilling activity in the U.S. Gulf
of Mexico in the second half of the year, apparently in response to higher gas
prices and improved access to capital markets. By comparison, very few of the
major oil and gas companies have indicated an intent to increase capital
expenditures for the remainder of 1999. Since major oil and gas companies are
responsible for most of the drilling activities in international markets, the
Company expects those markets to lag the improvement it believes is occurring
in the U.S. If oil and gas prices continue to show strength, the Company is
optimistic that drilling demand and dayrates for rigs operating in the U.S.
Gulf of Mexico could begin to improve by 2000, with international markets
beginning to improve sometime thereafter.
At June 30, 1999, the Company had $1.1 billion of contract drilling backlog
expected to be realized as follows: $178 million during the remainder of 1999,
$377 million in 2000, and $542 million in 2001 through 2003. Contract drilling
backlog at December 31, 1998 was $1.3 billion.
Contract Drilling Operations
Data with respect to the Company's contract drilling operations follows:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ ------------------------------
% Increase % Increase
1999 1998 (Decrease) 1999 1998 (Decrease)
-------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contract drilling
revenues by area
(in millions): (1)
Gulf of Mexico $ 43.5 $ 75.2 (42%) $ 99.8 $ 146.7 (32%)
North Sea 36.8 43.5 (15%) 80.3 77.0 4%
West Africa 23.9 53.4 (55%) 51.2 112.9 (55%)
Other 37.4 30.6 22% 70.3 47.6 48%
------- ------- ------- -------
$ 141.6 $ 202.7 (30%) $ 301.6 $ 384.2 (21%)
======= ======= ======= =======
Average rig utilization (2) 78% 97% 81% 98%
Average dayrate $63,700 $77,000 $65,300 $73,300
____________
(1) Includes revenues earned from affiliates.
(2) Excludes the Glomar Beaufort Sea I concrete island drilling system, a
currently inactive, special-purpose mobile offshore rig designed for
arctic operations, and rigs during the periods they were being converted
to drilling operations from other uses.
</TABLE>
Of the $61.1 million decrease in contract drilling revenues for the second
quarter of 1999 as compared with the comparable quarter of 1998, $41.2 million
was attributable to a decrease in average dayrates, and $32.3 million was
attributable to a decrease in average rig utilization. These decreases were
partially offset by a $13.1 million increase attributable to the addition to
the fleet of the Glomar Explorer drillship in August 1998.
Of the $82.6 million decrease in contract drilling revenues for the six months
ended June 30, 1999 as compared with the six months ended June 30, 1998, $69.7
million was attributable to a decrease in average dayrates, and $54.4 million
was attributable to a decrease in average rig utilization. These decreases
were partially offset by a $43.9 million increase attributable to the addition
to the fleet of the Glomar Celtic Sea semisubmersible in February 1998, the
Glomar Arctic IV semisubmersible in March 1998, and the Glomar Explorer
drillship in August 1998.
(PAGE)
The Company experienced lower rig utilization in the second quarter of 1999
as compared with the comparable quarter of 1998 in most of its geographic
markets. In the second quarter of 1999, the Company averaged 94 percent
utilization for its rigs in the U.S. Gulf of Mexico, 92 percent in the North
Sea, and 32 percent in West Africa. This compares with the Company's second
quarter 1998 average rig utilization of 99 percent in the U.S. Gulf of Mexico,
92 percent in the North Sea, and 100 percent in West Africa.
For the six months ended June 30, 1999, the Company averaged 96 percent
utilization for its rigs in the U.S. Gulf of Mexico, 93 percent in the North
Sea, and 47 percent in West Africa. This compares with the Company's average
rig utilization for the six months ended June 30, 1998 of 100 percent in the
U.S. Gulf of Mexico, 95 percent in the North Sea, and 99 percent in West
Africa.
The mobilization of rigs between the geographic areas shown in the preceding
table also affected each area's revenues over the periods indicated.
Specifically, the Company mobilized one jackup from the U.S. Gulf of Mexico
to the North Sea in May 1998, one jackup from California to the North Sea in
July 1998, one semisubmersible from the North Sea to the east coast of
Canada in November 1998, one drillship from West Africa to offshore Peru in
April 1999, and one drillship from the U.S. Gulf of Mexico to West Africa in
May 1999.
In December 1998, the Company conducted an evaluation of the service lives
of the rigs in its drilling fleet. Based on the results of the evaluation,
effective January 1, 1999, the Company increased the estimated useful lives
of its jackups and semisubmersibles to 30 years to better reflect their
estimated economic lives. Prior to the change, jackups were depreciated
over 25-year lives, and semisubmersibles generally were depreciated over
20-year lives. For the quarter ended June 30 1999, the effect of the change
was to decrease depreciation expense by $6.5 million. For the six months
ended June 30, 1999, the effect of the change was to decrease depreciation
expense by $12.9 million.
The Company's operating profit margin for contract drilling operations
decreased to 36 percent for the second quarter of 1999 from 52 percent
in the second quarter of 1998 primarily as a result of lower average rig
utilization and dayrates. Contract drilling operating expenses for the
second quarter of 1999 decreased by $6.1 million due to lower expenses in
connection with the Company's cold-stacked rigs and lower depreciation
resulting from the increase in rig lives, partly offset by the August 1998
addition of the Glomar Explorer and higher operating costs incurred on the
Glomar Grand Banks, which, prior to December 1998, was being leased from
the Company under a bareboat charter. Under a bareboat charter the Company
provides the customer with a rig, and the customer uses its own crews
to operate the rig.
The Company's operating profit margin for contract drilling operations
decreased to 38 percent for the six months ended June 30, 1999 from 52
percent for the six months ended June 30, 1998 primarily as a result of
lower average rig utilization and dayrates. Contract drilling operating
expenses for the six months ended June 30, 1999 increased by $4.6 million
due to the operating costs of the three rigs added to the fleet in 1998
and higher costs incurred for the Glomar Grand Banks, partly offset by
lower expenses due to cold-stacked rigs and lower depreciation resulting
from the increase in rig lives.
As of August 9, 1999, eleven of the Company's rigs were located in the U.S.
Gulf of Mexico, ten were offshore West Africa, six were in the North Sea,
and one was offshore each of Argentina, Trinidad, Canada, and Peru. In
September 1999, the Company plans to move two jackups to the U.S. Gulf of
Mexico from West Africa. The Company will incur the cost of mobilizing these
rigs, which is expected
(PAGE)
to be approximately $3.6 million. The Company has not obtained a drilling
contract or other commitment for either of these rigs, but, based on current
market conditions in the U.S. Gulf of Mexico, it expects to do so in the
fourth quarter of 1999. At August 9, 1999, eight of the Company's thirty-one
active rigs were without contracts or other commitments.
Drilling Management Services
Drilling management services revenues decreased by $104.9 million to $56.4
million in the second quarter of 1999 from $161.3 million in the second
quarter of 1998, and operating income decreased $0.3 million to $0.7 million
in the second quarter of 1999 from $1.0 million for the second quarter of 1998.
The decrease in revenues consisted of a $67.8 million decrease attributable to
lower average turnkey revenues per well, a $27.6 million decrease attributable
to daywork and other revenues, and a $9.5 million decrease attributable to a
reduction in the number of turnkey wells completed to 19 in the second quarter
of 1999 from 23 in the second quarter of 1998.
Drilling management services revenues decreased by $130.8 million to $128.5
million for the six months ended June 30, 1999 from $259.3 million for the six
months ended June 30, 1998, and operating income decreased $3.0 million to a
loss of $1.9 million for the six months ended June 30, 1999 from income of
$1.1 million for the six months ended June 30, 1998. The decrease in revenues
consisted of a $75.9 million decrease attributable to lower average turnkey
revenues per well, a $31.8 million decrease attributable to daywork and other
revenues, and a $23.1 million decrease attributable to a reduction in the
number of turnkey wells completed to 37 for the six months ended June 30, 1999
from 46 for the comparable prior-year period.
The declines in drilling management services operating results for the quarter
and six months ended June 30, 1999 were primarily due to the unfavorable
effects of the fixed costs of rigs under contract to the Company. Early in
the first half of 1999, the Company was paying for the use of as many as nine
rigs under term contracts signed in late 1997 and early 1998 at rates above
current-market rates. The incremental costs of these rigs above what they
would have cost if contracted as needed on the spot market were $3.3 million
and $11.8 million for the quarter and six months ended June 30, 1999,
respectively. In addition, in the second quarter of 1999, the Company
recognized $1.5 million of estimated losses on turnkey wells that were
expected to be completed during the third quarter of 1999 at a loss compared to
none for the second quarter of 1998. In 1998, the incremental costs of rigs
under term contracts at above then-current market rates were $9.8 million and
$14.3 million for the second quarter and first six months, respectively. At
June 30, 1999, the Company had fulfilled substantially all obligations related
to rigs contracted at above-market rates. As a result, the Company estimates
the effect on second-half operating results of the costs of rigs under term
contracts at rates above the spot market will not be material. Currently,
the Company is contracting rigs as needed on a well-by-well basis.
Drilling management operating results for the quarter and six months ended
June 30, 1999 and 1998 were favorably affected by downward revisions to
estimates of the costs of wells completed in prior periods. The effects of
these downward revisions were to increase income by $0.3 million and $1.7
million for the three and six months ended June 30, 1999 and by $2.9 million
and $7.2 million for the three and six months ended June 30, 1998.
(PAGE)
Other Income and Expense
General and administrative expenses increased to $6.0 million in the second
quarter of 1999 from $5.0 million in the second quarter of 1998. General
and administrative expenses increased to $11.9 million for the six months
ended June 30, 1999 from $10.4 million for the six months ended June 30, 1998.
The increases were due to increases in professional fees, partly offset by
lower compensation expense of a stock-based compensation plan, which costs
were based on Company performance and the market price of the Company's common
stock.
Interest expense increased to $13.6 million in the second quarter of 1999 from
$12.0 million in the second quarter of 1998. Interest expense increased to
$27.0 million for the six months ended June 30, 1999 from $20.4 million for
the comparable prior-year period. The increases were primarily due to higher
debt incurred to finance the construction of rigs.
The Company capitalized $5.9 million of interest expense for the second
quarter of 1999 as compared to $5.0 million for the second quarter of 1998,
an increase of $0.9 million. The increase was due to interest capitalized on
the two new-builds, the Glomar C.R. Luigs and the Glomar Jack Ryan, partially
offset by the completion of conversion of the Glomar Celtic Sea, which entered
service in the first quarter of 1998, and the Glomar Explorer, which entered
service in the third quarter of 1998.
Interest income decreased to $0.7 million in the second quarter of 1999 from
$1.0 million in the second quarter of 1998. Interest income decreased to $1.5
million for the six months ended June 30, 1999 from $1.9 million for the six
months ended June 30, 1998. The decreases were primarily due to lower cash
balances.
LIQUIDITY AND CAPITAL RESOURCES
The Company's two ultra deep-water drillship construction projects, the
Glomar C.R. Luigs and the Glomar Jack Ryan, are currently on budget.
Projected net cash outlays in connection with the construction of
the drillships are expected to total $607 million. The Company expects to
spend $223 million, including $20 million of capitalized interest, over
the remaining half of 1999 and in early 2000 to complete construction of
the rigs. The Glomar C.R. Luigs is scheduled to be delivered in the fourth
quarter of 1999, and the Glomar Jack Ryan is scheduled to be delivered in
the first quarter of 2000. Both rigs are committed to multi-year contracts
on delivery.
For the six months ended June 30, 1999, $149.0 million of cash flow was
provided by operating activities, $2.1 million was provided from sales of
properties and equipment, and $1.7 million was provided from exercises of
employee stock options. From these amounts, plus available cash, $180.3
million was used for capital expenditures, $10.0 million was used to reduce
amounts drawn under the Company's bank revolving credit facilities, net of
borrowings, and $0.3 million was used to purchase marketable securities.
For the six months ended June 30, 1998, $126.7 million of cash flow was
provided by operating activities, $296.0 million (after deduction for
discount and underwriting fees) was provided from the issuance of $300
million of 7% Notes due 2028, and $3.8 million was provided from exercises
of employee stock options. From these amounts, together with cash on hand,
$426.6 million was used for capital expenditures, and $40.0 million was
used to reduce amounts drawn under the Company's bank revolving credit
facilities, net of borrowings.
(PAGE)
Capital expenditures for the full year 1999 are anticipated to be $399
million, including $153 million for construction of the Glomar C.R. Luigs,
$163 million for construction of the Glomar Jack Ryan, $51 million for
improvements to the remainder of the drilling fleet, $26 million for
capitalized interest, and $6 million for other expenditures.
In August 1999 the Company initiated a commercial paper program under which
debt may be issued at rates more favorable than the rates available under the
Company's bank credit facilities. The sum of debt issued under the commercial
paper program and borrowings under the Company's bank credit facilities is
limited to the maximum amount available for borrowings under the bank credit
facilities, which is $390 million.
As of June 30, 1999, the Company had $19.1 million in cash and cash equivalents
and $245.0 million available for borrowings under the Company's bank revolving
credit/commercial paper facilities. As of December 31, 1998, the Company had
$56.9 million in cash and cash equivalents.
The Company believes it will be able to meet all of its current obligations,
including capital expenditures and debt service, from its cash flow from
operations, its existing bank credit/commercial paper facilities, and its cash
and cash equivalents. The Company presently expects that capital expenditures
for the remainder of 1999 will exceed the Company's cash flow from operating
activities for the period and that amounts outstanding under the Company's
bank revolving credit/commercial paper facilities will increase.
YEAR 2000 READINESS DISCLOSURE
The "Year 2000" problem refers to the inability of certain computer systems
and other equipment with embedded chips or processors (collectively "Business
Systems") to correctly interpret the century from a date in which the year is
represented by only two digits. Business Systems which are not Year 2000
ready may not be able to correctly process certain data, or in extreme
situations, may cause a system to be disabled or fail to function reliably.
The Company's goal was to have substantially all of its critical Business
Systems functioning properly with respect to the Year 2000 problem by
June 30, 1999, and to develop by June 30, 1999, contingency plans for use
in the event of disruptions caused by the Year 2000 problem. In order to
meet these goals, the Company established a task force of key employees and
outside professional consultants to identify, repair, and replace, if
necessary, significant Business Systems that have Year 2000 problems.
These overall goals and objectives are referred to as the "Year 2000 Project
Plan." The Year 2000 Project Plan has been divided into various subprojects
and phases. The six subprojects include: Information Technology, Rigs,
Supplier/Customer/Shareholder Relations, Telecommunications, Facilities,
and Employee Benefit Plans. The Company has identified the Information
Technology and Rigs subprojects as the most critical, based on the possibility
of business disruptions as a result of any Year 2000 failures in these areas.
As of June 30, 1999, the Company's Year 2000 Project Plan was substantially
complete.
Information Technology. In 1995 the Company purchased and developed new
accounting, payroll, personnel, and purchasing software as part of the
migration of its computer systems from a mainframe platform to a PC-based
client/server platform. The Company has tested the software to confirm
that it is Year 2000 ready. The Company, as part of its normal business
operations, has upgraded certain software under software maintenance
agreements and has replaced its computer hardware on an as-needed basis as
new technology has been developed. The Company believes its computer
hardware to be substantially Year 2000 ready. Although the Company has
successfully completed testing of its
(PAGE)
critical business applications, in June 1999 software vendors for two
business applications notified the Company that it will need to install
additional minor upgrades to each of those applications prior to the end
of 1999. These installations are expected to be completed, and the systems
retested for Year 2000 readiness, by the end of the third quarter of 1999.
Rigs. The Company has inventoried each drilling rig's critical Business
Systems. This inventory was evaluated, and written documentation regarding
the critical Business Systems' Year 2000 readiness was compiled. In addition,
the Company engaged an independent consultant to conduct on-site surveys on
each rig type. Due to the identical nature of the equipment on board rigs
within a particular rig type, the Company selected 14 of its 31 rigs to be
surveyed. The Company believes these 14 rigs represent all of the rigs in the
fleet. The surveys were completed by June 30, 1999, and minimal remediation
was required. Both the contingency planning and assessment phases of this
subproject were completed as of June 30, 1999. The Glomar C.R. Luigs and
Glomar Jack Ryan, the Company's new-build, ultra deep-water drillships, will
be assessed and tested during the commissioning of the vessels. Contingency
planning for the new-builds will be conducted in conjunction with assessment.
As a company that provides offshore drilling rigs, the Company routinely
faces the possibility of a catastrophic event affecting its rigs. A Year
2000 failure could produce such an event, which is the reason the Company
has developed a specific subproject that focuses exclusively on analyzing,
remediating, testing, and contingency planning for possible Year 2000
disruptions aboard its rigs. The Company's present analysis of its most
reasonably likely worst-case scenario for Year 2000 disruptions involves
potential downtime on its semisubmersibles and deep-water drillships
consisting of its recent conversions, the Glomar Explorer and Glomar Celtic
Sea, the two new-build, deep-water drillships, the Glomar C.R. Luigs and
Glomar Jack Ryan, and the Glomar Grand Banks and Glomar Arctic I, all of
which are under long-term contract. A Year 2000 failure of critical hardware
or software needed for proper functioning of these vessels could lead to
downtime, which, if lengthy, could materially impact the Company's financial
condition. The Glomar Arctic I has been assessed, and no remediation has
been required. The Glomar Grand Banks, Glomar Explorer, and Glomar Celtic
Sea have been assessed, and remediation on these rigs has been completed,
other than minimal remediation on the Glomar Celtic Sea, which is expected
to be completed by September 30, 1999. Certain critical hardware and
software aboard the Glomar Explorer and Glomar Celtic Sea were tested for
Year 2000 readiness during the commissioning of the vessels. The Glomar
C.R. Luigs and Glomar Jack Ryan will be assessed and tested for Year 2000
readiness during the commissioning of the vessels. The Company's contingency
plan considers any significant failure related to the most reasonably likely
worst-case scenario as well as the severity and duration of the impact of
such a scenario. From this analysis, a Year 2000 contingency plan has been
developed to mitigate those risks.
Supplier/Customer/Shareholder Relations. The Company has initiated
communications with its significant customers, suppliers, and business
partners (collectively "Key Business Partners") to seek Year 2000 readiness
assurances and determine the extent to which their failure to correct their
own Year 2000 problems could affect the Company. The Company's Key Business
Partners include suppliers whose critical function is to provide drilling
rig capital equipment essential to the operation of a rig. As part of normal
business operations, the Company generally does not maintain an inventory of
drilling rig capital equipment replacement parts. Although the Company has
a contingency plan in place, in the event replacement parts are required for
a rig and the Company is unsuccessful in purchasing the equipment from its
suppliers, the rig could experience idle time resulting in loss of revenue.
Other Key Business Partners include customers who provide the Company's
source of revenue and cash flow. Any disruption in this revenue stream could
impact the Company's cash flow, results of operations, and financial
(PAGE)
position. In large measure, the Company must rely on such Key Business
Partners to make accurate and complete disclosures about their Year 2000
efforts in order for its assessment of their readiness to be effective.
Accordingly, the Company cannot guarantee that Year 2000 problems, if any,
in Key Business Partners' systems on which it relies will be timely resolved,
nor, in most cases, can it reasonably inspect their Year 2000 efforts or
independently verify their representations to the Company. In addition, the
Company cannot foretell the effect on its business operations from the failure
of systems owned by others, from the delivery of inaccurate information from
other companies, or from the inability of Key Business Partners' systems to
interface with the Company's systems. Where appropriate, the Company plans
to explore the possibility of conducting tests of critical system interfaces
with relevant Key Business Partners. The Company cannot guarantee that other
companies' failure to resolve their Year 2000 problems would not have a
material adverse effect on the Company; however, the Company will continue to
assess these risks and prepare accordingly.
Telecommunications. The Company has compiled a list of its inventory of
telecommunications hardware and software and has contacted vendors and
service providers to determine the Year 2000 readiness of their products.
The subproject was completed in April 1999, and no significant remediation
was required. The Company believes the Telecommunications subproject to
be Year 2000 ready.
Facilities. The Company has conducted evaluations of computer-controlled
components within the Company's main offices worldwide. In addition, the
Company has evaluated the Year 2000 readiness information of its landlords
for its main offices. The subproject was completed in June 1999, and no
significant remediation was required. The Company believes the Facilities
subproject to be Year 2000 ready.
Employee Benefit Plans. The Company has confirmed the Year 2000 readiness
of its internal systems that interface with its Employee Benefit Plans, as
well as the readiness of its third-party service providers. Testing of the
Company's system interfaces with its service providers is complete.
Total costs for Year 2000 remediation, including outside consultants, are
estimated to be approximately $1.0 million, of which $0.7 million has been
incurred as of August 9, 1999. Such costs are exclusive of certain software
corrections or upgrades that are generally made in the normal course of
business and are exclusive of the information system upgrade in 1995, which
was unrelated to the Year 2000 issue. The Company does not separately track
the internal costs of its Year 2000 Project Plan. Such costs are primarily
related to payroll costs of the Company's information technology group.
Costs related to the Year 2000 issue are funded from the Company's operating
cash flows.
Contingency planning for each subproject has been incorporated into the
Company's Year 2000 Project Plan. The Company has engaged external consultants
to develop contingency plans for Business Systems and certain processes that
are highly critical to its business operations. The contingency plans
encompass alternative courses of action, with limited reliance on computer
software and hardware, in the event that Business Systems or processes are
not Year 2000 ready. The contingency plans were substantially completed by
June 30, 1999 but will be continually updated through December 31, 1999.
The Company's expectations regarding the Year 2000 problem are subject to
uncertainties which could affect the Company's results of operations or
financial condition. For example, the Company could be adversely affected
by the inability of its Key Business Partners to remedy their own Year 2000
problems, or the Company could be unsuccessful in identifying or repairing
all of its Year 2000 problems related to its critical business operations,
and, as such, the Company's results of operations or financial condition
(PAGE)
could be materially impacted. Accordingly, success depends on many factors,
some of which are outside the Company's control. Despite reasonable efforts,
the Company cannot assure that it will not experience any disruptions or
otherwise be adversely affected by Year 2000 problems. While the Company
does not expect any catastrophic failures of any of its Business Systems,
such belief is based upon future events which cannot be reasonably predicted.
As part of assessing its Year 2000 risks, the Company has been communicating
with its insurance carrier to determine the extent to which Year 2000 problems
are covered.
To the extent that any reader of the above Year 2000 Readiness Disclosure is
other than an investor or potential investor in the Company's equity or debt
securities, this disclosure is made for the sole purpose of communicating or
disclosing information aimed at correcting, helping to correct, and/or avoid
Year 2000 failures. This statement is made with the intention to comply
fully with the Year 2000 Information and Readiness Disclosure Act as signed
into law October 19, 1998. All statements made herein shall be construed
within the confines of that Act.
FORWARD-LOOKING STATEMENTS
Under the Private Securities Litigation Reform Act of 1995, companies
are provided a "safe harbor" for discussing their expectations regarding
future performance. We believe it is in the best interests of our
stockholders and the investment community to use these provisions and
provide such forward-looking information. We do so in this report and
other communications. Our forward-looking statements include things such
as our expectation that our total claim against Sedco will exceed the
amount we have recorded as a noncurrent receivable; our opinion that the
resolution of various lawsuits will not have a material adverse effect
on our results of operations, financial position, or cash flows; our
statements regarding the dates rigs currently on contract will complete
their contracts or become available; our statement that the number of
cold-stacked rigs could increase from current levels; our expectation that
earnings in the second half of 1999 will be significantly lower than first
half earnings; our expectation that international markets will lag the
improvement we believe is occurring in the U.S.; our optimism that drilling
demand and dayrates for rigs operating in the U.S. Gulf of Mexico could
begin to improve by 2000, with international markets beginning to improve
sometime thereafter; our expectations as to when our contract drilling
backlog will be realized; our expectation regarding the cost of mobilizing
certain rigs; our expectation that certain rigs will obtain drilling
contracts or other commitments in the fourth quarter of 1999; our estimate
that the effect on second-half operating results of the costs of rigs under
term contracts at rates above the spot market will not be material; our
projected cash outlays and the timing of such outlays in connection with
the construction of drillships; the periods during which we expect our new
drillships to be delivered; our anticipated capital expenditures for the
full year 1999; our expectation that capital expenditures for the remainder
of 1999 will exceed cash flow from operating activities for the period and
that amounts outstanding under the Company's bank revolving credit/commercial
paper facilities will increase; our belief that we will be able to meet all
of our current obligations from our cash flow from operations, our existing
bank credit/commercial paper facilities, and our cash and cash equivalents;
our belief that our computer hardware is substantially Year 2000 ready; our
expectations regarding the dates by which various parts of and work in
connection with our Year 2000 Project Plan will be performed or completed;
our expectations regarding the estimated costs and projected effectiveness
of our Year 2000 Project Plan and of our equipment and software in the
context of the Year 2000 problem; our expectation that there will not be any
catastrophic failures of any of our Business Systems; and other statements
that are not historical facts.
(PAGE)
Our forward-looking statements speak only as of the date of this report and
are based on currently available industry, financial, and economic data and
our operating plans. They are also inherently uncertain, and investors must
recognize that events could turn out to be materially different from our
expectations.
Factors that could cause or contribute to such differences include, but are
not limited to, information being unavailable to us because it has not been
provided to us on a timely basis or will take more time to uncover; changes
in the markets for oil and gas and for offshore drilling services, including
changes in demand for our services which may result from changes in oil and
gas operators' drilling programs due to factors such as changing oil and gas
prices; the uncertainties inherent in resolving disputed matters through
negotiation, arbitration, litigation, or other means; uncertainties regarding
the plans of our competitors, particularly with regard to changes in the
composition of their rig fleets and the marketing of their rigs; other
competitive and technological changes that affect our ability to market our
services competitively and cost effectively; the risks of operating in
international markets, including changes in political, economic, trade, and
regulatory climates; the operational risks and uncertainties inherent in
offshore oil and gas drilling, particularly on a turnkey basis; unanticipated
costs or delays in our drillship construction projects due to things such as
price inflation, design and engineering problems, regulatory requirements, and
labor difficulties; the risks and uncertainties discussed above in our Year
2000 Readiness Disclosure; and such other risk factors as may be discussed in
the Company's reports filed with the U.S. Securities and Exchange Commission.
The Company disclaims any obligation or undertaking to disseminate any updates
or revisions to its statements, forward-looking or otherwise, to reflect
changes in the Company's expectations or any change in events, conditions, or
circumstances on which any such statements are based.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not significant.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of stockholders of the Company was held on May 6, 1999.
At the meeting, four directors were elected by a vote of holders of Common
Stock, $.10 par value per share, as outlined in the Company's Proxy Statement
relating to the meeting. With respect to the election of directors, (i)
proxies were solicited pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended, (ii) there was no solicitation in opposition to the
management's nominees as listed in the Proxy Statement, and (iii) each of such
nominees was elected. The following numbers of votes were cast as to the
director nominees: Thomas W. Cason, 153,063,650 votes for and 961,223 votes
withheld; Jerry C. Martin, 152,989,149 votes for and 1,035,724 votes withheld;
Robert E. Rose, 153,027,307 votes for and 997,566 votes withheld; and John
Whitmire, 152,971,110 votes for and 1,053,763 votes withheld. In addition, a
vote was taken on ratification of the appointment of PricewaterhouseCoopers
LLP as independent accountants for the Company and its subsidiaries for 1999,
with 153,165,356 votes being cast for ratification, 454,509 votes being cast
against ratification, and 405,008 abstentions and broker non-votes.
(PAGE)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Letter Employment Agreement dated May 6, 1999, among the Company,
Global Marine Corporate Services Inc., and C. Russell Luigs.
10.2 Second Amendment and Appointment of Successor Trustee Under the
Global Marine Executive Deferred Compensation Trust dated as of
June 1, 1999, by and between Global Marine Corporate Services Inc.
and SEI Trust Company.
10.3 First Amendment and Appointment of Successor Trustee Under the
Global Marine Benefit Equalization Retirement Trust dated as of
June 1, 1999, by and between Global Marine Corporate Services Inc.
and SEI Trust Company.
10.4 First Amendment and Appointment of Successor Trustee Under the
Global Marine Outside Director Deferred Compensation Trust dated
as of June 1, 1999, by and between Global Marine Corporate Services
Inc. and SEI Trust Company.
10.5 Second Amendment to Credit Agreement and Loan Documents, dated
as of April 23, 1999, among Global Marine Inc., Various Lending
Institutions, Bankers Trust Company, as administrative agent,
Skandinaviska Enskilda Banken AB (publ) and Den Norske Bank ASA,
New York Branch, as co-agents, and Societe Generale, Southwest
Agency, as documentation agent.
10.6 Second Amendment to Credit Agreement and Loan Documents, dated
as of April 23, 1999, among Global Marine Inc., Various Lending
Institutions, Bankers Trust Company, as administrative agent,
ABN Amro Bank, N.V., Houston Agency, as syndication agent, and
Societe Generale, Southwest Agency, as documentation agent.
10.7 Letter Agreement dated as of June 4, 1999, between Global Marine
Inc. and Societe Generale.
10.8 Loan Agreement dated as of June 4, 1999, between Global Marine
Inc. and Altair Funding Corporation.
15.1 Letter of Independent Accountants regarding Awareness of
Incorporation by Reference.
27.1 Financial Data Schedule. (Exhibit 27.1 is being submitted as
an exhibit only in the electronic format of this Quarterly Report
on Form 10-Q being submitted to the Securities and Exchange
Commission. Exhibit 27.1 shall not be deemed filed for purposes
of Section 11 of the Securities Act of 1933, Section 18 of the
Securities Exchange Act of 1934 or Section 323 of the Trust
Indenture Act, or otherwise be subject to the liabilities of such
sections, nor shall it be deemed a part of any registration
statement to which it relates.)
(PAGE)
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter
ended June 30, 1999.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GLOBAL MARINE INC.
(Registrant)
Dated: August 12, 1999 /s/ Thomas R. Johnson
---------------------------------------
Thomas R. Johnson
Vice President and Corporate Controller
(Duly Authorized Officer and Principal
Accounting Officer of the Registrant)
INDEX TO EXHIBITS
10.1 Letter Employment Agreement dated May 6, 1999, among
the Company, Global Marine Corporate Services Inc.,
and C. Russell Luigs.
10.2 Second Amendment and Appointment of Successor Trustee
Under the Global Marine Executive Deferred Compensation
Trust dated as of June 1, 1999, by and between Global
Marine Corporate Services Inc. and SEI Trust Company.
10.3 First Amendment and Appointment of Successor Trustee
Under the Global Marine Benefit Equalization Retirement
Trust dated as of June 1, 1999, by and between Global
Marine Corporate Services Inc. and SEI Trust Company.
10.4 First Amendment and Appointment of Successor Trustee
Under the Global Marine Outside Director Deferred
Compensation Trust dated as of June 1, 1999, by and
between Global Marine Corporate Services Inc. and SEI
Trust Company.
10.5 Second Amendment to Credit Agreement and Loan Documents,
dated as of April 23, 1999, among Global Marine Inc.,
Various Lending Institutions, Bankers Trust Company, as
administrative agent, Skandinaviska Enskilda Banken
AB(publ) and Den Norske Bank ASA, New York Branch, as
co-agents, and Societe Generale, Southwest Agency, as
documentation agent.
10.6 Second Amendment to Credit Agreement and Loan Documents,
dated as of April 23, 1999, among Global Marine Inc.,
Various Lending Institutions, Bankers Trust Company, as
administrative agent, ABN Amro Bank, N.V., Houston Agency,
as syndication agent, and Societe Generale, Southwest
Agency, as documentation agent.
10.7 Letter Agreement dated as of June 4, 1999, between Global
Marine Inc. and Societe Generale.
10.8 Loan Agreement dated as of June 4, 1999, between Global
Marine Inc. and Altair Funding Corporation.
15.1 Letter of Independent Accountants regarding Awareness of
Incorporation by Reference.
27.1 Financial Data Schedule. (Exhibit 27.1 is being submitted
as an exhibit only in the electronic format of this
Quarterly Report on Form 10-Q being submitted to the
Securities and Exchange Commission. Exhibit 27.1 shall not
be deemed filed for purposes of Section 11 of the Securities
Act of 1933, Section 18 of the Securities Exchange Act of
1934 or Section 323 of the Trust Indenture Act, or otherwise
be subject to the liabilities of such sections, nor shall
it be deemed a part of any registration statement to which
it relates.)
EXHIBIT 10.1
Global Marine Inc.
777 N. ELDRIDGE PARKWAY
HOUSTON, TEXAS 77079-4493
U.S.A.
TELEPHONE: 281/596-5100 MAILING ADDRESS:
TELEX: 765558 P.O. Box 4577
FAX: 281/531-1260 May 6, 1999 HOUSTON, TEXAS 77210-4577
Mr. C. Russell Luigs
Global Marine Inc.
777 N. Eldridge Parkway
Houston, Texas 77079
Dear Mr. Luigs:
This letter will serve as evidence of an employment agreement
by and among Global Marine Inc. ("GMI"), Global Marine Corporate
Services Inc. ("GMCSI"), as employer, and C. Russell Luigs, as
employee.
GMI and GMCSI agree to continue Mr. Luigs' employment for a term
commencing May 6, 1999, and expiring at the earlier of the time of
GMI's annual meeting of stockholders in 2002 or May 31, 2002.
During the term of Mr. Luigs' continued employment hereunder, he
will initially serve as Chairman of the Executive Committee of the
Board of Directors of GMI and will also serve in those other
offices and directorships of GMI, GMCSI, and GMI's other
subsidiaries and affiliates to which he may from time to time be
appointed or elected. Mr. Luigs will also provide such additional
services as the Chief Executive Officer of GMI may reasonably
request from time to time; provided, however, that such additional
services will not substantially increase the amount of time Mr.
Luigs is currently required to devote to the performance of his
employment obligations. Mr. Luigs may engage in passive investment
and other business activities during the term of this agreement
unless advised in writing by GMI or GMCSI that, in their reasonable
opinion, such activities would materially interfere or conflict
with Mr. Luigs' obligations hereunder.
During all periods of continued employment hereunder, Mr.
Luigs will receive a salary at the annual rate of $413,145, or such
larger amount as may be established from time to time by the Board
of Directors of GMI and approved by GMCSI. GMI and GMCSI agree to
permit Mr. Luigs, during all periods of continued employment
hereunder, if and to the extent eligible, to participate in any
401(k) plan, retirement plan, group life, hospitalization or
disability insurance plan, health program, pension plan, similar
benefit plan or other so-called "fringe benefits" of GMI, GMCSI, or
any other GMI subsidiary or affiliate which may be available to
other employees on terms no less favorable to Mr. Luigs than the
terms offered to such other employees, and Mr. Luigs will be
provided with an automobile on terms no less favorable to Mr. Luigs
than the terms pursuant to which he is currently being provided
with an automobile. Mr. Luigs' may perform his obligations
hereunder at such location or locations as may be selected by Mr.
Luigs in his sole discretion.
In the event that Mr. Luigs' employment or this agreement is
terminated without his consent for reasons other than Cause, as
hereinafter defined, prior to the earlier of the time of GMI's
annual meeting of stockholders in 2002 or May 31, 2002, GMI and
GMCSI will continue Mr. Luigs' salary until the earlier of the time
of GMI's annual meeting of stockholders in 2002 or May 31, 2002.
During this period, Mr. Luigs' group insurance benefits will be
continued for him until similar benefits are provided through other
employment and all stock options granted to Mr. Luigs by GMI will
remain exercisable in accordance with their terms. "Cause" will
mean willful and material acts of misconduct deliberately harmful
to GMI, GMCSI, or any other GMI subsidiary or affiliate and will
not mean inadequate performance or incompetence.
In the event of a dispute or disagreement regarding the right
of Mr. Luigs to receive any compensation or other benefit hereunder
or the amount of such compensation or other benefit, Mr. Luigs will
be reimbursed by GMI and GMCSI for any and all attorney's fees and
other costs and expenses as and when expended by Mr. Luigs in
connection with such dispute or disagreement, regardless of the
outcome thereof. Further, in the event Mr. Luigs becomes entitled
to any monies or benefits hereunder, GMI and GMCSI agree to pay
such monies and provide such benefits without regard to any and all
claims, offsets or causes of action which GMI or GMCSI may have
against Mr. Luigs until such time, if ever, as GMI or GMCSI shall
have obtained a final judgment in its favor in a court of competent
jurisdiction regarding such claim, offset or cause of action.
This agreement supersedes any and all prior employment
agreements between Mr. Luigs and GMI or GMCSI.
GLOBAL MARINE INC. GLOBAL MARINE CORPORATE
SERVICES INC.
By: s / Robert E. Rose By: s /Thomas R. Johnson
Robert E. Rose Thomas R. Johnson
President and CEO Vice President
Accepted and Agreed:
s / C. Russell Luigs
C. Russell Luigs
EXHIBIT 10.2
SECOND AMENDMENT
AND
APPOINTMENT OF SUCCESSOR TRUSTEE
UNDER THE
GLOBAL MARINE EXECUTIVE DEFERRED COMPENSATION TRUST
THIS AGREEMENT made and entered into as of the 1st day of
June, 1999, by and between GLOBAL MARINE CORPORATE SERVICES INC.,
a California corporation having its principal place of business in
Houston, Texas (the "Company"), and SEI TRUST COMPANY, a
Pennsylvania trust company having its principal place of business
in Oaks, Pennsylvania (the "Successor Trustee").
W I T N E S S E T H:
WHEREAS, by the Global Marine Executive Deferred
Compensation Trust, dated effective as of January 1, 1995, by and
between the Company and Texas Commerce Bank, N.A., a national
banking association ("TCB"), the Company established a trust (the
"Trust Agreement") for the purpose of holding the assets
accumulated under the Global Marine Executive Supplemental
Retirement Plan of 1990, as amended and restated effective as of
May 9, 1990, and as thereafter amended (said Plan, together with
any amendments thereto hereinafter referred to as the "Plan"), and
to provide for the investment and administration of such assets;
and
WHEREAS, Chase Bank of Texas, N.A., a national banking
association (the "Trustee") is the successor in interest to TCB;
and
WHEREAS, in accordance with Section 10 of the Trust
Agreement, the Board of Directors of the Company has duly
authorized the Company to remove the Trustee and to appoint the
Successor Trustee as successor trustee under the Trust Agreement,
and the Trustee has been so advised; and
WHEREAS, the Successor Trustee desires to accept
appointment as successor trustee under the Trust Agreement, and, in
connection therewith, the Company desires to amend the Trust
Agreement;
NOW, THEREFORE, the Company and the Successor Trustee
hereby agree as follows:
1. The Company has provided the Trustee with written notice
of its removal as trustee under the Trust Agreement, effective
as of June 1, 1999, or as soon thereafter as practicable (the
"Succession Date") pursuant to Section 10 of the Trust
Agreement.
2. The Company hereby appoints the Successor Trustee to
replace the Trustee as the trustee under the Trust Agreement,
effective as of the Succession Date.
3. The Successor Trustee hereby accepts its appointment as
successor trustee under the Trust Agreement and agrees to be
bound by the terms of the Trust Agreement, as amended by
Paragraphs 5 through 9 hereof, effective as of the Succession
Date.
4. The Successor Trustee hereby agrees to hold such assets
as are delivered to it by the Trustee, and such assets as may
be received by it subsequent to the Succession Date, pursuant
to the terms of the Trust Agreement.
5. The Company and the Successor Trustee hereby agree that
Section 8(f) of the Trust Agreement shall be deleted in its
entirety, effective as of the Succession Date, and the
following sections relettered accordingly.
6. The Company and the Successor Trustee hereby agree that
Section 5 of the Trust Agreement shall be amended effective as
of the Succession Date, by adding the following to the end
thereof:
"(d) Notwithstanding the foregoing, if and so long as an
Investment Manager has been appointed by the Retirement Plan
Committee to direct the investment of the Trust Fund in
accordance with Section 5(e) of this Trust Agreement, the
Investment Manager, and not the Retirement Plan Committee,
shall manage, invest and reinvest the Trust Fund, all as
hereinafter provided.
(e) The Retirement Plan Committee shall from time to
time specify by written notice to the Trustee whether the
investment of the Trust Fund, in the manner provided in
Section 5(a), shall be managed solely by the Retirement Plan
Committee, or shall be directed in whole or in part by one or
more investment managers ("Investment Managers") appointed by
the Retirement Plan Committee, or whether both the Retirement
Plan Committee and one or more Investment Managers are to
participate in investment management and if so how the
investment responsibility is to be divided with respect to
assets, classes of assets or separate investment funds
specified and defined in such notice. Any such Investment
Manager shall either (i) be a registered investment adviser
under the Investment Advisers Act of 1940, (ii) be a bank, as
defined in that Act or (iii) be an insurance company qualified
to perform investment management services under the laws of
more than one state. If investment of the Trust Fund is to be
directed in whole or in part by an Investment Manager, the
Trustee shall be given copies of the instruments appointing
the Investment Manager and evidencing his acceptance of such
appointment and acknowledgment that he is a fiduciary of the
Plan, and a certificate evidencing the Investment Manager's
registration under said Act. The Trustee may continue to rely
upon such instruments and certificate until otherwise notified
in writing by the Retirement Plan Committee.
The Trustee shall follow the directions of the Investment
Manager regarding the investment and reinvestment of the Trust
Fund, or such portion thereof as shall be under management by
the Investment Manager, and shall be under no duty or
obligation to review any investment to be acquired, held or
disposed of pursuant to such directions nor to make any
recommendations with respect to the disposition or continued
retention of any such investment. The Trustee shall have no
liability or responsibility for acting without question on the
direction of, or failing to act in the absence of any
direction from, the Investment Manager, unless the Trustee
knows that by such action or failure to act it will be
participating in a breach of fiduciary duty by the Investment
Manager.
The Investment Manager at any time and from time to time
may issue orders for the purchase or sale of securities
directly to a broker, and in order to facilitate such
transaction the Trustee upon request shall execute and deliver
appropriate trading authorizations. Written notification of
the issuance of each such order shall be given promptly to the
Trustee by the Investment Manager, and the execution of each
such order shall be confirmed to the Trustee by the broker.
Such notification shall be authority for the Trustee to pay
for the securities purchased against receipt thereof and to
deliver securities sold against payment therefor, as the case
may be.
(h) In the event that an Investment Manager should
resign or be removed by the Retirement Plan Committee,
the Retirement Plan Committee shall manage the investment
of the Trust fund pursuant to Section 5(a) unless and
until it shall appoint of another Investment Manager as
provided in this Section 5."
7. The Company and the Successor Trustee hereby agree that
Section 11(b) of the Trust Agreement shall be amended,
effective as of the Succession Date, to read as follows:
"(b) In the event that a successor trustee has not been
appointed by the Company within twenty (20) days after the
Resignation Notice Date or the occurrence of a vacancy in the
position of Trustee, a Successor Trustee may be appointed by
any Pennsylvania or Texas or United States District Court
holding terms in Houston, Harris County, Texas, or in Chester
County, Pennsylvania, upon the application of Trustee."
8. The Company and the Successor Trustee hereby agree that
Section 13(c) of the Trust Agreement shall be amended,
effective as of the Succession Date, to read as follows:
"(c) This Trust Agreement and the Trust hereby
created shall be governed, construed, administered and
regulated in all respects under the laws of the
Commonwealth of Pennsylvania."
9. The Company and the Successor Trustee hereby agree that
Section 13(f) of the Trust Agreement shall be amended,
effective as of the Succession Date, to delete the phrase "at
600 Travis, Houston, Texas, 77002" and insert in lieu thereof
the phrase "One Freedom Valley Drive, Oaks, Pennsylvania
19456."
10. In consideration of the acceptance by the Successor
Trustee of said successor trusteeship, the Company agrees with
the Successor Trustee as follows:
(a) The Successor Trustee shall have no duty or
responsibility to inquire into the acts or omissions of
the Trustee under the Trust Agreement, the Company or any
of its predecessors, subsidiaries or affiliates, any
member or members of the Administrator designated to
administer the Plan and the Trust Agreement or any agent
of the aforementioned entities to the extent that any
such acts or omissions may have occurred prior to the
Succession Date. Further, the Successor Trustee shall
have fiduciary responsibility, pursuant to the terms of
the Trust Agreement, only with respect to such assets as
are delivered to it by the Trustee, and such assets as
may be received by it subsequent to the Succession Date
during the period that the Successor Trustee is acting in
such fiduciary capacity.
(b) Successor Trustee shall not be liable or
responsible, in any manner whatsoever, for any action or
omitted action in connection with the administration of
the Plan and Trust Agreement prior to the Succession Date
by the Trustee, person serving as Administrator, the
Company or any of its predecessors, subsidiaries or
affiliates, or any agent of the aforementioned entities.
11. Upon the transfer by the Trustee to the Successor Trustee
of all of the trust properties held by the Trustee under the
Trust Agreement (and the records relating thereto) after the
Succession Date, the Successor Trustee hereby agrees to
acknowledge receipt of said trust properties and hereby agrees
to hold and invest said trust properties as part of the Trust
to be held and invested pursuant to the terms and provisions
of the Trust Agreement.
12. It is the intention of the parties hereto that the
provisions and covenants of this Agreement shall be binding
upon the successors and assigns of the Company and the
Successor Trustee, respectively.
IN WITNESS WHEREOF, the Company and the Successor Trustee
have executed this instrument in multiple counterparts, each of
which shall have the force and effect of an original, but all of
which shall together constitute but one and the same instrument, as
of the day and year first above written.
GLOBAL MARINE CORPORATE
SERVICES INC.
By: /s/ W. Matt Ralls
Name: W. Matt Ralls
Title: Vice President and Treasurer
ATTEST: Carole P. Driver
SEI TRUST COMPANY,
Successor Trustee
By: /s/ Carl Bechdel
Name: Carl Bechdel
Title: Vice President & Loan Officer
ATTEST: Jeffrey J. Roche
THE STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, on this day
personally appeared W. Matt Ralls, Vice President & Treasurer
of GLOBAL MARINE CORPORATE SERVICES INC., known to me to be the person
and officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that the same was the act of said GLOBAL MARINE
CORPORATE SERVICES INC., a California corporation, and that he executed
the same as the act and deed of such corporation for the purposes and
consideration therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 17th day
of May, 1999.
/s/Linda L. Semick
Notary Public, State of Texas
Seal
My Commission Expires
May 9, 2002
THE COMMONWEALTH OF PENNSYLVANIA
COUNTY OF CHESTER
BEFORE ME, the undersigned authority, on this day
personally appeared Carl Bechdel, Jeff Roche of, SEI TRUST
COMPANY known to me to be the person and officer whose name is
subscribed to the foregoing instrument, and acknowledged to me that he
executed the same as the act of the said SEI TRUST COMPANY, a Pennsylvania
trust company, and that he was duly authorized to perform the same and that
he executed the same as the act and deed of such trust company for the
purposes and consideration therein expressed and in the capacity
therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 25 day
of May, 1999.
/s/ Lynette E. Orsino
Notary Public, Commonwealth of
Pennsylvania
Seal
My Commission Expires
June 21, 1999
IN WITNESS WHEREOF, the Trustee acknowledges of the
foregoing instrument, as of the day and year first above written.
CHASE BANK OF TEXAS, N.A., Trustee
By: /s/ Lynne L. Arnold
Name: Lynne L. Arnold
Title: Vice President and Trust Officer
ATTEST: Rhonda E. Good, A.V.P. and Trust Officer
THE STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, on this day
personally appeared Lynne L. Arnold, Vice President and Trust Officer
of Chase Bank of Texas, N.A., known to me to be the person and officer
whose name is subscribed to the foregoing instrument, and acknowledged
to me that he executed the same as the act of the said Chase Bank of Texas,
N.A., a national banking association, and that he was duly authorized to
perform the same and that he executed the same as the act and deed of such
national association for the purposes and consideration therein
expressed and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 27th day
of May, 1999.
/s/ Linda L. Smith
Notary Public, State of Texas
Seal
My Commission Expires
June 5, 2001
EXHIBIT 10.3
FIRST AMENDMENT
AND
APPOINTMENT OF SUCCESSOR TRUSTEE
UNDER THE
GLOBAL MARINE BENEFIT EQUALIZATION
RETIREMENT TRUST
THIS AGREEMENT made and entered into as of the 1st day of
June, 1999, by and between GLOBAL MARINE CORPORATE SERVICES INC.,
a California corporation having its principal place of business in
Houston, Texas (the "Company"), and SEI TRUST COMPANY, a
Pennsylvania trust company having its principal place of business
in Oaks, Pennsylvania (the "Successor Trustee").
W I T N E S S E T H:
WHEREAS, by the Global Marine Benefit Equalization
Retirement Trust, dated effective as of January 1, 1990, by and
between the Company and Texas Commerce Bank, N.A., a national
banking association ("TCB"), the Company established a trust (the
"Trust Agreement") for the purpose of holding the assets
accumulated under the Global Marine Benefit Equalization Retirement
Plan, as adopted effective as of January 1, 1990, and as thereafter
amended (said Plan, together with any amendments thereto
hereinafter referred to as the "Plan"), and to provide for the
investment and administration of such assets; and
WHEREAS, Chase Bank of Texas, N.A., a national banking
association (the "Trustee") is the successor in interest to TCB;
and
WHEREAS, in accordance with Article IX of the Trust
Agreement, the Board of Directors of the Company has duly
authorized the Company to remove the Trustee and to appoint the
Successor Trustee as successor trustee under the Trust Agreement,
and the Trustee has been so advised; and
WHEREAS, the Successor Trustee desires to accept
appointment as successor trustee under the Trust Agreement, and, in
connection therewith, the Company desires to amend the Trust
Agreement;
NOW, THEREFORE, the Company and the Successor Trustee
hereby agree as follows:
1. The Company has provided the Trustee with written notice
of its removal as trustee under the Trust Agreement, effective
as of June 1, 1999, or as soon thereafter as practicable (the
"Succession Date"), pursuant to Article IX of the Trust
Agreement.
2. As of the Succession Date, the Company hereby appoints
the Successor Trustee to replace the Trustee as the trustee
under the Trust Agreement.
3. The Successor Trustee hereby accepts its appointment as
successor trustee under the Trust Agreement and agrees to be
bound by the terms of the Trust Agreement, as amended by
Paragraphs 5 through 13 hereof, effective as of the Succession
Date.
4. The Successor Trustee hereby agrees to hold such assets
as are delivered to it by the Trustee, and such assets as may
be received by it subsequent to the Succession Date, pursuant
to the terms of the Trust Agreement.
5. The Company and the Successor Trustee hereby agree that
Section 1.12 of the Trust Agreement shall be amended,
effective as of the Succession Date, to delete the phrase
"under the Texas Trust Code."
6. The Company and the Successor Trustee hereby agree that
the first sentence in the second paragraph of Section 2.2 of
the Trust Agreement shall be amended, effective as of the
Succession Date, to delete the phrase "within the meaning of
Section 111.004(4) of the Texas Trust Code."
7. The Company and the Successor Trustee hereby agree that
the text of Article V shall be designated as Section 5.1 and
entitled "Distribution and Authorized Investment," effective
as of the Succession Date.
8. The Company and the Successor Trustee hereby agree that
Section 5.1 shall be amended, effective as of the Succession
Date, by inserting after the second sentence thereof the
following:
"The foregoing sentence notwithstanding, if and so long
as an Investment Manager has been appointed by the
Administrator to direct the investment of the Trust Fund
in accordance with Section 5.2 of this Trust Agreement,
the Investment Manager, and not the Trustee, shall
manage, invest and reinvest the Trust Fund, all as
hereinafter provided."
9. The Company and the Successor Trustee hereby agree that
the Trust Agreement shall be amended, effective as of the
Succession Date, by adding the following Section 5.2 thereto:
"5.2. DIRECTION OF INVESTMENT: The Administrator
shall from time to time specify by written notice to the
Trustee whether the investment of the Trust Fund, in the
manner provided in Section 5.1, shall be managed solely
by the Trustee, or shall be directed in whole or in part
by one or more investment managers ("Investment
Managers") appointed by the Administrator, or whether
both the Trustee and one or more Investment Managers are
to participate in investment management and if so how the
investment responsibility is to be divided with respect
to assets, classes of assets or separate investment funds
specified and defined in such notice. Any such
Investment Manager shall either (i) be a registered
investment adviser under the Investment Advisers Act of
1940, (ii) be a bank, as defined in that Act or (iii) be
an insurance company qualified to perform investment
management services under the laws of more than one
state. If investment of the Trust Fund is to be directed
in whole or in part by an Investment Manager, the Trustee
shall be given copies of the instruments appointing the
Investment Manager and evidencing his acceptance of such
appointment and acknowledgment that he is a fiduciary of
the Plan, and a certificate evidencing the Investment
Manager's registration under said Act. The Trustee may
continue to rely upon such instruments and certificate
until otherwise notified in writing by the Administrator.
The Trustee shall follow the directions of the
Investment Manager regarding the investment and
reinvestment of the Trust Fund, or such portion thereof
as shall be under management by the Investment Manager,
and shall be under no duty or obligation to review any
investment to be acquired, held or disposed of pursuant
to such directions nor to make any recommendations with
respect to the disposition or continued retention of any
such investment. The Trustee shall have no liability or
responsibility for acting without question on the
direction of, or failing to act in the absence of any
direction from, the Investment Manager, unless the
Trustee knows that by such action or failure to act it
will be participating in a breach of fiduciary duty by
the Investment Manager.
The Investment Manager at any time and from time to
time may issue orders for the purchase or sale of
securities directly to a broker, and in order to
facilitate such transaction the Trustee upon request
shall execute and deliver appropriate trading
authorizations. Written notification of the issuance of
each such order shall be given promptly to the Trustee by
the Investment Manager, and the execution of each such
order shall be confirmed to the Trustee by the broker.
Such notification shall be authority for the Trustee to
pay for the securities purchased against receipt thereof
and to deliver securities sold against payment therefor,
as the case may be.
In the event that an Investment Manager should
resign or be removed by the Administrator, the Trustee
shall manage the investment of the Trust fund pursuant to
Section 5.1 unless and until it shall be notified of the
appointment of another Investment Manager as provided in
this Section 5.2."
10. The Company and the Successor Trustee hereby agree that
Section 8.6 of the Trust Agreement shall be amended, effective
as of the Succession Date, to read as follows:
"8.6 LAWS OF PENNSYLVANIA TO GOVERN: This Trust
Agreement and the Trust hereby created shall be governed,
construed, administered and regulated in all respects
under the laws of the Commonwealth of Pennsylvania."
11. The Company and the Successor Trustee hereby agree that
the third sentence of Section 9.3 of the Trust Agreement
shall be amended, effective as of the Succession Date, to read
as follows:
"In the event that a successor trustee has not been
appointed by the Company within twenty (20) days after
the Resignation Notice Date or the occurrence of a
vacancy in the position of Trustee, a Successor Trustee
may be appointed by any Pennsylvania or Texas or United
States District Court holding terms in Houston, Harris
County, Texas, or in Chester County, Pennsylvania, upon
the application of Trustee."
12. The Company and the Successor Trustee hereby agree that
Section 11.2(d) of the Trust Agreement shall be amended,
effective as of the Succession Date, to delete the phrase
"under the Texas Trust Code."
13. The Company and the Successor Trustee hereby agree that
Section 12.3 of the Trust Agreement shall be amended,
effective as of the Succession Date, to delete the phrase "600
Travis, Houston, Texas, 77002" and insert in lieu thereof the
phrase "One Freedom Valley Drive, Oaks, Pennsylvania 19456."
14. In consideration of the acceptance by the Successor
Trustee of said successor trusteeship, the Company agrees with
the Successor Trustee as follows:
(a) The Successor Trustee shall have no duty or
responsibility to inquire into the acts or omissions of
the Trustee under the Trust Agreement, the Company or any
of its predecessors, subsidiaries or affiliates, any
member or members of the Administrator designated to
administer the Plan and the Trust Agreement or any agent
of the aforementioned entities to the extent that any
such acts or omissions may have occurred prior to the
Succession Date. Further, the Successor Trustee shall
have fiduciary responsibility, pursuant to the terms of
the Trust Agreement, only with respect to such assets as
are delivered to it by the Trustee, and such assets as
may be received by it subsequent to the Succession Date
during the period that the Successor Trustee is acting in
such fiduciary capacity.
(b) Successor Trustee shall not be liable or
responsible, in any manner whatsoever, for any action or
omitted action in connection with the administration of
the Plan and Trust Agreement prior to the Succession Date
by the Trustee, person serving as Administrator, the
Company or any of its predecessors, subsidiaries or
affiliates, or any agent of the aforementioned entities.
15. Upon the transfer by the Trustee to the Successor Trustee
of all of the trust properties held by the Trustee under the
Trust Agreement (and the records relating thereto) after the
Succession Date, the Successor Trustee hereby agrees to
acknowledge receipt of said trust properties and hereby agrees
to hold and invest said trust properties as part of the Trust
to be held and invested pursuant to the terms and provisions
of the Trust Agreement.
16. It is the intention of the parties hereto that the
provisions and covenants of this Agreement shall be binding
upon the successors and assigns of the Company and the
Successor Trustee, respectively.
IN WITNESS WHEREOF, the Company and the Successor Trustee
have executed this instrument in multiple counterparts, each of
which shall have the force and effect of an original, but all of
which shall together constitute but one and the same instrument, as
of the day and year first above written.
GLOBAL MARINE CORPORATE
SERVICES INC.
By: /s/ W. Matt Ralls
Name: W. Matt Ralls
Title: Vice President and Treasurer
ATTEST: Carole P. Driver
SEI TRUST COMPANY,
Successor Trustee
By: /s/ Carl Bechdel
Name: Carl Bechdel
Title: Vice President and Loan Officer
ATTEST: Jeffrey J. Roche
THE STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, on this day
personally appeared W. Matt Ralls, Vice President & Treasurer of
GLOBAL MARINE CORPORATE SERVICES INC., known to me to be the
person and officer whose name is subscribed to the foregoing
instrument, and acknowledged to me that the same was the act of
said GLOBAL MARINE CORPORATE SERVICES INC., a California corporation,
and that he executed the same as the act and deed of such corporation for
the purposes and consideration therein expressed, and in the capacity
therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 17th day
of May, 1999.
/s/ Linda L. Semick
Notary Public, State of Texas
Seal
My Commission Expires
May 27, 2002
THE COMMONWEALTH OF PENNSYLVANIA
COUNTY OF CHESTER
BEFORE ME, the undersigned authority, on this day
personally appeared Carl Bechdel, Jeff Roche of, SEI TRUST
COMPANY known to me to be the person and officer whose name is
subscribed to the foregoing instrument, and acknowledged to me that
he executed the same as the act of the said SEI TRUST COMPANY, a
Pennsylvania trust company, and that he was duly authorized to perform
the same and that he executed the same as the act and deed of such trust
company for the purposes and consideration therein expressed and in
the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 25 day
of May, 1999.
/s/ Lynette E. Orsino
Notary Public, Commonwealth of
Pennsylvania
SEAL
My Commission Expires
June 21, 1999
IN WITNESS WHEREOF, the Trustee acknowledges of the
foregoing instrument, as of the day and year first above written.
CHASE BANK OF TEXAS, N.A., Trustee
By: /s/ Lynne L. Arnold
Name: Lynne L. Arnold
Title: Vice President and Trust Officer
ATTEST: Rhonda E. Good, A.V.P.
THE STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, on this day
personally appeared Lynne L. Arnold, Vice President and Trust Officer
of Chase Bank of Texas, N.A., known to me to be the person and officer
whose name is subscribed to the foregoing instrument, and acknowledged to
me that he executed the same as the act of the said Chase Bank of Texas,
N.A., a national banking association, and that he was duly authorized to
perform the same and that he executed the same as the act and deed of such
national association for the purposes and consideration therein
expressed and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 27th day
of May, 1999.
/s/ Linda L. Smith
Notary Public, State of Texas
Seal
My Commission Expires
June 5, 2001
EXHIBIT 10.4
FIRST AMENDMENT AND APPOINTMENT OF SUCCESSOR TRUSTEE
UNDER THE GLOBAL MARINE OUTSIDE DIRECTOR
DEFERRED COMPENSATION TRUST
THIS AGREEMENT made and entered into as of the 1st day of
June, 1999, by and between GLOBAL MARINE INC., a Delaware
corporation having its principal place of business in Houston,
Texas (the "Company"), and SEI TRUST COMPANY, a Pennsylvania trust
company having its principal place of business in Oaks,
Pennsylvania (the "Successor Trustee").
W I T N E S S E T H:
WHEREAS, by the Global Marine Outside Director Deferred
Compensation Trust, dated effective as of January 1, 1996, by and
between the Company and Texas Commerce Bank, N.A., a national
banking association ("TCB"), the Company established a trust (the
"Trust Agreement") for the purpose of holding the assets
accumulated under the Global Marine Retirement Plan for Outside
Directors, as adopted effective as of August 1, 1989, and as
thereafter amended (said Plan, together with any amendments thereto
hereinafter referred to as the "Plan"), and to provide for the
investment and administration of such assets; and
WHEREAS, Chase Bank of Texas, N.A., a national banking
association (the "Trustee") is the successor in interest to TCB;
and
WHEREAS, in accordance with Section 10 of the Trust
Agreement, the Board of Directors of the Company has duly
authorized the Company to remove the Trustee and to appoint the
Successor Trustee as successor trustee under the Trust Agreement,
and the Trustee has been so advised; and
WHEREAS, the Successor Trustee desires to accept
appointment as successor trustee under the Trust Agreement, and, in
connection therewith, the Company desires to amend the Trust
Agreement;
NOW, THEREFORE, the Company and the Successor Trustee
hereby agree as follows:
1. The Company has provided the Trustee with written notice
of its removal as trustee under the Trust Agreement, effective
as of June 1, 1999, or as soon thereafter as practicable (the
"Succession Date"), pursuant to Section 10 of the Trust
Agreement.
2. The Company hereby appoints the Successor Trustee to
replace the Trustee as the trustee under the Trust Agreement,
effective as of the Succession Date.
3. The Successor Trustee hereby accepts its appointment as
successor trustee under the Trust Agreement and agrees to be
bound by the terms of the Trust Agreement, as amended by
Paragraphs 5 through 9 hereof, effective as of the Succession
Date.
4. The Successor Trustee hereby agrees to hold such assets
as are delivered to it by the Trustee, and such assets as may
be received by it subsequent to the Succession Date, pursuant
to the terms of the Trust Agreement.
5. The Company and the Successor Trustee hereby agree that
Section 8(f) of the Trust Agreement shall be deleted in its
entirety, effective as of the Succession Date, and the
following sections relettered accordingly.
6. The Company and the Successor Trustee hereby agree that
Section 5 shall be amended effective as of June 1, 1999, by
adding the following to the end thereof:
"(d) Notwithstanding the foregoing, if and so long
as an Investment Manager has been appointed by the
Retirement Plan Committee to direct the investment of the
Trust Fund in accordance with Section 5(e) of this Trust
Agreement, the Investment Manager, and not the Retirement
Plan Committee, shall manage, invest and reinvest the
Trust Fund, all as hereinafter provided.
(e) The Retirement Plan Committee shall from time
to time specify by written notice to the Trustee whether
the investment of the Trust Fund, in the manner provided
in Section 5(a), shall be managed solely by the
Retirement Plan Committee, or shall be directed in whole
or in part by one or more investment managers
("Investment Managers") appointed by the Retirement Plan
Committee, or whether both the Retirement Plan Committee
and one or more Investment Managers are to participate in
investment management and if so how the investment
responsibility is to be divided with respect to assets,
classes of assets or separate investment funds specified
and defined in such notice. Any such Investment Manager
shall either (i) be a registered investment adviser under
the Investment Advisers Act of 1940, (ii) be a bank, as
defined in that Act or (iii) be an insurance company
qualified to perform investment management services under
the laws of more than one state. If investment of the
Trust Fund is to be directed in whole or in part by an
Investment Manager, the Trustee shall be given copies of
the instruments appointing the Investment Manager and
evidencing his acceptance of such appointment and
acknowledgment that he is a fiduciary of the Plan, and a
certificate evidencing the Investment Manager's
registration under said Act. The Trustee may continue to
rely upon such instruments and certificate until
otherwise notified in writing by the Retirement Plan
Committee.
The Trustee shall follow the directions of the
Investment Manager regarding the investment and
reinvestment of the Trust Fund, or such portion thereof
as shall be under management by the Investment Manager,
and shall be under no duty or obligation to review any
investment to be acquired, held or disposed of pursuant
to such directions nor to make any recommendations with
respect to the disposition or continued retention of any
such investment. The Trustee shall have no liability or
responsibility for acting without question on the
direction of, or failing to act in the absence of any
direction from, the Investment Manager, unless the
Trustee knows that by such action or failure to act it
will be participating in a breach of fiduciary duty by
the Investment Manager.
The Investment Manager at any time and from
time to time may issue orders for the purchase or sale of
securities directly to a broker, and in order to
facilitate such transaction the Trustee upon request
shall execute and deliver appropriate trading
authorizations. Written notification of the issuance of
each such order shall be given promptly to the Trustee by
the Investment Manager, and the execution of each such
order shall be confirmed to the Trustee by the broker.
Such notification shall be authority for the Trustee to
pay for the securities purchased against receipt thereof
and to deliver securities sold against payment therefor,
as the case may be.
In the event that an Investment Manager should
resign or be removed by the Retirement Plan Committee,
the Retirement Plan Committee shall manage the investment
of the Trust Fund pursuant to Section 5(a) unless and
until it shall appoint another Investment Manager as
provided in this Section 5."
7. The Company and the Successor Trustee hereby agree that
Section 11(b) of the Trust Agreement shall be amended,
effective as of the Succession Date, to read as follows:
"(b) In the event that a successor trustee has not
been appointed by the Company within twenty (20) days
after the Resignation Notice Date or the occurrence of a
vacancy in the position of Trustee, a Successor Trustee
may be appointed by any Pennsylvania or Texas or United
States District Court holding terms in Houston, Harris
County, Texas, or in Chester County, Pennsylvania, upon
the application of Trustee."
8. The Company and the Successor Trustee hereby agree that
Section 13(c) of the Trust Agreement shall be amended,
effective as of the Succession Date, to read as follows:
"(c) This Trust Agreement and the Trust hereby
created shall be governed, construed, administered and
regulated in all respects under the laws of the
Commonwealth of Pennsylvania."
9. The Company and the Successor Trustee hereby agree that
Section 13(f) of the Trust Agreement shall be amended,
effective as of the Succession Date, to delete the phrase "at
600 Travis, Houston, Texas, 77002" and insert in lieu thereof
the phrase "One Freedom Valley Drive, Oaks, Pennsylvania
19456."
10. In consideration of the acceptance by the Successor
Trustee of said successor trusteeship, the Company agrees with
the Successor Trustee as follows:
(a) The Successor Trustee shall have no duty or
responsibility to inquire into the acts or omissions of
the Trustee under the Trust Agreement, the Company or any
of its predecessors, subsidiaries or affiliates, any
member or members of the Administrator designated to
administer the Plan and the Trust Agreement or any agent
of the aforementioned entities to the extent that any
such acts or omissions may have occurred prior to the
Succession Date. Further, the Successor Trustee shall
have fiduciary responsibility, pursuant to the terms of
the Trust Agreement, only with respect to such assets as
are delivered to it by the Trustee, and such assets as
may be received by it subsequent to the Succession Date
during the period that the Successor Trustee is acting in
such fiduciary capacity.
(b) Successor Trustee shall not be liable or
responsible, in any manner whatsoever, for any action or
omitted action in connection with the administration of
the Plan and Trust Agreement prior to the Succession Date
by the Trustee, person serving as Administrator, the
Company or any of its predecessors, subsidiaries or
affiliates, or any agent of the aforementioned entities.
11. Upon the transfer by the Trustee to the Successor Trustee
of all of the trust properties held by the Trustee under the
Trust Agreement (and the records relating thereto) after the
Succession Date, the Successor Trustee hereby agrees to
acknowledge receipt of said trust properties and hereby agrees
to hold and invest said trust properties as part of the Trust
to be held and invested pursuant to the terms and provisions
of the Trust Agreement.
12. It is the intention of the parties hereto that the
provisions and covenants of this Agreement shall be binding
upon the successors and assigns of the Company and the
Successor Trustee, respectively.
IN WITNESS WHEREOF, the Company and the Successor Trustee
have executed this instrument in multiple counterparts, each of
which shall have the force and effect of an original, but all of
which shall together constitute but one and the same instrument, as
of the day and year first above written.
GLOBAL MARINE INC.
By: /s/ W. Matt Ralls
Name: W. Matt Ralls
Title: Senior Vice President and
Chief Financial Officer
ATTEST: Carole P. Driver
SEI TRUST COMPANY,
Successor Trustee
By: /s/ Carl Bechdel
Name: Carl Bechdel
Title: Vice President & Loan Officer
ATTEST: Jeffrey J. Roche
THE STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, on this day
personally appeared W. Matt Ralls, Senior Vice President and Chief
Financial Officer of GLOBAL MARINE INC., known to me to be the person
and officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that the same was the act of said GLOBAL MARINE INC.,
a Delaware corporation, and that he executed the same as the act and deed
of such corporation for the purposes and consideration therein expressed,
and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 17th day
of May, 1999.
/s/ Linda L. Semick
Notary Public, State of Texas
Seal
My Commission Expires
May 7, 2002
THE COMMONWEALTH OF PENNSYLVANIA
COUNTY OF CHESTER
BEFORE ME, the undersigned authority, on this day
personally appeared Carl Bechdel, Jeff Roche of, SEI TRUST COMPANY
known to me to be the person and officer whose name is subscribed to
the foregoing instrument, and acknowledged to me that he executed the
same as the act of the said SEI TRUST COMPANY, a Pennsylvania trust company,
and that he was duly authorized to perform the same and that he
executed the same as the act and deed of such trust company for the
purposes and consideration therein expressed and in the capacity
therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 25 day
of May, 1999.
/s/ Lynette E. Orsino
Notary Public, Commonwealth of
Pennsylvania
Seal
My Commission Expires
June 21, 1999
IN WITNESS WHEREOF, the Trustee acknowledges of the
foregoing instrument, as of the day and year first above written.
CHASE BANK OF TEXAS, N.A., Trustee
By: /s/ Lynne L. Arnold
Name: Lynne L. Arnold
Title: Vice President and Trust Officer
ATTEST: Rhonda E. Good, A.V.P. and Trust Officer
THE STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, on this day
personally appeared Lynne L. Arnold, Vice President and Trust officer
of Chase Bank of Texas, N.A., known to me to be the person and officer
whose name is subscribed to the foregoing instrument, and acknowledged to
me that he executed the same as the act of the said Chase Bank of Texas,
N.A., a national banking association, and that he was duly authorized to
perform the same and that he executed the same as the act and deed of such
national association for the purposes and consideration therein
expressed and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 27th day
of May, 1999.
/s/ Linda L. Smith
Notary Public, State of Texas
Seal
My Commission Expires
June 5, 2001
EXHIBIT 10.5
SECOND AMENDMENT TO
CREDIT AGREEMENT AND LOAN DOCUMENTS
This Second Amendment to Credit Agreement and Loan
Documents (this "Amendment") dated as of April 23, 1999 is among
GLOBAL MARINE INC., a Delaware corporation (the "BORROWER"), the
banks named on the signature pages hereto (together with their
respective successors and assigns in such capacity, the "BANKS"),
BANKERS TRUST COMPANY, as administrative agent for the Banks
(together with its successors and assigns in such capacity, the
"ADMINISTRATIVE AGENT"), SKANDINAVISKA ENSKILDA BANKEN AB (PUBL)
and DEN NORSKE BANK ASA, NEW YORK BRANCH, as co-agents for the
Banks, SOCIETE GENERALE, SOUTHWEST AGENCY, as documentation agent
for the Banks (all of the agents, collectively, together with their
successors and assigns in such capacity, the "AGENTS").
PRELIMINARY STATEMENT
The Borrower, the Banks and the Agents have entered into
that certain Second Amended and Restated Credit Agreement dated as
of December 9, 1997 (as amended or restated from time to time, the
"CREDIT AGREEMENT").
The Borrower, the Banks and the Agents wish to amend the
Credit Agreement and execute this Amendment to reflect same.
NOW THEREFORE, in consideration of the foregoing and the
mutual agreements set forth herein, the parties agree as follows:
Section 1. DEFINITIONS. Unless otherwise defined in this
Amendment, each capitalized term used in this Amendment has the
meaning assigned to such term in the Credit Agreement.
Section 2. AMENDMENTS. a. Section 8.07 of the Credit
Agreement is hereby amended in its entirety to read as follows:
"8.07 CASH INTEREST COVERAGE RATIO. Borrower shall
not permit the ratio of (a) Consolidated EBITDA for any four
consecutive complete fiscal quarters then last ended to (b)
Consolidated Cash Interest Expense of Borrower for such
period, commencing with the fiscal quarter ending June 30,
1999, to be less than the following ratio for the periods
indicated:
Through End of January 1, January 1, All
CALENDAR YEAR 2000 - 2000- Subsequent
1999 DECEMBER 31, DECEMBER 31, PERIODS
2.5 to 1.0 2.25 to 1.0 2.5 to 1.0 3.0 to 1.0"
b. Section 8.08 of the Credit Agreement is hereby
amended in its entirety to read as follows:
"Section 8.08 DEBT TO CAPITALIZATION RATIO. Borrower
shall not permit the ratio of its Consolidated Indebtedness to
its Consolidated Total Capitalization measured at the end of
each fiscal quarter, commencing with the quarter ending June
30, 1999, to be greater at any time than the following ratio
for the periods indicated:
Through End of All Other
CALENDER YEAR SUBSEQUENT
2000 PERIODS
.50 to 1.0 .45 to 1.0 "
c. The defined term "Change of Control" is hereby
amended in Section 10 of the Credit Agreement by deleting the
reference to "35%" contained therein and replacing it with "50%".
d. The pricing grid contained in the definition of
"Applicable Eurodollar Margin" is hereby deleted and the following
substituted therefor:
APPLICABLE
EURODOLLAR
RATING MARGIN
A- / A3 .375%
BBB+ / Baa1 .50%
BBB / Baa2 .625%
BBB- / Baa3 .75%
BB+ / Ba1 1.00%
e. Annex I of the Credit Agreement is hereby deleted
and replaced with the Annex I attached hereto.
Section 3. RATIFICATION. The Borrower hereby ratifies and
confirms all of the Obligations under the Credit Agreement (as
amended hereby) and the Notes. All references to the "Credit
Agreement" shall mean the Credit Agreement as amended hereby and as
the same may be amended, supplemented, restated or otherwise
modified and in effect from time to time in the future.
Section 4. EFFECTIVENESS. The effectiveness of this
Amendment is subject to the condition precedent that: (a) (i) the
Administrative Agent shall have received in form and substance
reasonably satisfactory to the Banks and in such number of
counterparts as may be reasonably requested by the Administrative
Agent, this Amendment executed by the Borrower and each of the
Banks constituting the Required Banks and (ii) an amendment fee of
.125% of the Commitment of each Bank that has executed this
Amendment prior to April 23, 1999, and in regard to which the Agent
has notified the Borrower of such execution, and (b) the Borrower
shall have paid all of the Administrative Agent's reasonable costs
and expenses (other than legal fees and expenses, which shall be
payable promptly after Borrower receives an invoice from counsel to
Administrative Agent) incurred in connection herewith.
Section 5. REPRESENTATIONS AND WARRANTIES. The Borrower
hereby represents and warrants to the Banks that (a) the execution,
delivery and performance of this Amendment has been duly
authorized by all requisite corporate action on the part of the
Borrower, (b) the Credit Agreement (as amended hereby) constitutes
a valid and legally binding agreement enforceable against the
Borrower in accordance with its terms except, as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar
laws relating to or affecting the enforcement of creditors' rights
generally and by general principles of equity, (c) the
representations and warranties by the Borrower contained in the
Credit Agreement as amended hereby are true and correct on and as
of the date hereof in all material respects as though made as of
the date hereof unless such representation and warranty expressly
indicates that it is being made as of any specific date, in which
case such representations and warranties shall be true and correct
in all material respects as of such date, and except to the extent
that such representations and warranties are no longer true and
correct due to any action or inaction permitted or required to be
taken under the Credit Documents by Borrower or any Subsidiary, and
(d) no Default or Event of Default exists under the Credit
Agreement (as amended hereby).
Section 6. CHOICE OF LAW. THIS AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
Section 7. FINAL AGREEMENT. THE CREDIT AGREEMENT (AS
AMENDED HEREBY) REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL
AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by its officers thereunto duly authorized
as of the date first above written.
ADDRESS: GLOBAL MARINE INC.
777 N. Eldridge Road
Houston, Texas 77079-4416 By: /s/ W. Matt Ralls
Telecopy: (281) 596-5826 W. Matt Ralls
Telephone: (281) 596-5810 Senior Vice President - Chief
Attention: W. Matt Ralls Financial Officer and Treasurer
BANKERS TRUST COMPANY, Individually
and as Administrative Agent
By: /s/ Marcus M. Tarkington
Name: Marcus M. Tarkington
Title: Principal
ABN AMRO BANK, N.V., HOUSTON
AGENCY
By: /s/ Stuart Murray
Name: Stuart Murray
Title: Vice President
By: /s/ Deanna Breland
Name: Deanna Breland
Title: Vice President
ARGENTARIA, CAJA POSTAL Y BANCO
HIPOTECARIO, NEW YORK BRANCH
By: /s/ Augusto Godoy
Name: Augusto Godoy
Title: General Manager
THE BANK OF NOVA SCOTIA
By: /s/ M. D. Smith
Name: M. D. Smith
Title:Agent Operations
THE BANK OF TOKYO - MITSUBISHI,
LTD.
By: /s/ John W. McGhee
Name: John W. McGhee
Title: Vice President & Manager
CHRISTIANIA BANK og KREDITKASSE ASA
NEW YORK BRANCH
By: /s/ Martin Lunder
Name: Martin Lunder
Title: Senior Vice President
By: /s/ Hans Chr. Kjelsrud
Name: Hans Chr. Kjelsrud
Title: Senior Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Pascal Poupelle
Name: Palcal Poupelle
Title: Executive Vice President
DEN NORSKE BANK ASA, NEW YORK
BRANCH, Individually and as Co-
Agent
By: /s/ Barbara Gronquist
Name: Barbara Gronquist
Title: First Vice President
By: /s/ Chr. Tobias Backer
Name: Chr. Tobias Backer
Title: Assistant Vice President
GULF INTERNATIONAL BANK B.S.C.
By: /s/ Abdel-Fattah Tahoun
Name: Absel-Fattah Tahoun
Title: Senior Vice President
By: /s/ William B. Shephard
Name: William B. Shephard
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Marie B. Stewart
Name: Marie B. Stewart
Title: Vice President-MGT
SKANDINAVISKA ENSKILDA BANKEN AB
(PUBL), Individually and as Co-Agent
By: /s/ Jan Sjolig
Name: Jan Sjolig
Title:
SOCIETE GENERALE, SOUTHWEST
AGENCY, Individually and as
Documentation Agent
By: /s/ Richard A. Gould
Name: Richard A. Gould
Title: Director
TORONTO DOMINION (TEXAS), INC.
By: /s/ Carol Brandt
Name: Carol Brandt
Title: Vice President
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By: /s/ Richard L. Newman
Name: Richard L. Newman
Title: Director
By: /s/ Thomas Lee
Name: Thomas Lee
Title: Associate
ANNEX I
Second Amended and Restated Credit Agreement dated as of December 9, 1997
COMMITMENTS
BANK COMMITMENT
Bankers Trust Company $46,916,666.67
ABN AMRO Bank, N.V., Houston Agency $10,000,000.00
Argentaria, Caja Postal y Banco Hipotecario, $ 5,000,000.00
New York Branch
The Bank of Nova Scotia $15,000,000.00
The Bank of Tokyo-Mitsubishi, Ltd. $15,000,000.00
Credit Lyonnais New York Branch $10,000,000.00
Den norske Bank ASA, New York Branch $21,000,000.00
Societe Generale, Southwest Agency $33,333,333.33
Toronto Dominion (Texas), Inc. $18,750,000.00
WestDeutsche Landesbank Girozentrale,
New York Branch $10,000,000.00
Skandinaviska Enskilda Banken Ab (publ) $25,000,000.00
Christiania Bank og Kreditasse ASA New
York Branch $10,000,000.00
Morgan Guaranty Trust Company of New York $10,000,000.00
Gulf International Bank B.S.C. $10,000,000.00
Total $240,000,000.00
EXHIBIT 10.6
SECOND AMENDMENT TO
CREDIT AGREEMENT AND LOAN DOCUMENTS
This Second Amendment to Credit Agreement and Loan
Documents (this "Amendment") dated as of April 23, 1999 is among
GLOBAL MARINE INC., a Delaware corporation (the "BORROWER"), the
banks named on the signature pages hereto (together with their
respective successors and assigns in such capacity, the "BANKS"),
BANKERS TRUST COMPANY, as administrative agent for the Banks
(together with its successors and assigns in such capacity, the
"ADMINISTRATIVE AGENT"), ABN AMRO BANK, N.V., HOUSTON AGENCY, as
syndication agent for the Banks, SOCIETE GENERALE, SOUTHWEST
AGENCY, as documentation agent for the Banks (all of the agents,
collectively, together with their successors and assigns in such
capacity, the "AGENTS").
PRELIMINARY STATEMENT
The Borrower, the Banks and the Agents have entered into
that certain Credit Agreement dated as of January 29, 1998 (as
amended or restated from time to time, the "CREDIT AGREEMENT").
The Borrower, the Banks and the Agents wish to amend the
Credit Agreement and execute this Amendment to reflect same.
NOW THEREFORE, in consideration of the foregoing and the
mutual agreements set forth herein, the parties agree as follows:
Section 1. DEFINITIONS. Unless otherwise defined in this
Amendment, each capitalized term used in this Amendment has the
meaning assigned to such term in the Credit Agreement.
Section 2. AMENDMENTS. The Credit Agreement is hereby
amended as follows:
a. Section 8.07 of the Credit Agreement is hereby
amended in its entirety to read as follows:
"8.07 CASH INTEREST COVERAGE RATIO. Borrower shall
not permit the ratio of (a) Consolidated EBITDA for any four
consecutive complete fiscal quarters then last ended to
(b) Consolidated Cash Interest Expense of Borrower for such
period, commencing with the fiscal quarter ending June 30,
1999, to be less than the following ratio for the periods
indicated:
Through End of January 1, 2000 January 1, 2001 All Subsequent
Calender Year 1999 December 31, 2000 December 31, 2001 Periods
2.5 to 1.0 2.25 to 1.0 2.5 to 1.0 3.0 to 1.0"
b. Section 8.08 of the Credit Agreement is hereby
amended in its entirety to read as follows:
"Section 8.08 DEBT TO CAPITALIZATION RATIO. Borrower
shall not permit the ratio of its Consolidated Indebtedness to
its Consolidated Total Capitalization measured at the end of
each fiscal quarter, commencing with the quarter ending June
30, 1999, to be greater at any time than the following ratio
for the periods indicated:
Through End of All Other
Calendar Year 2000 Subsequent Periods
.50 to 1.0 .45 to 1.0 "
c. The defined term "Change of Control" is hereby
amended in Section 10 of the Credit Agreement by deleting the
reference to "35%" contained therein and replacing it with "50%".
d. Annex I of the Credit Agreement is hereby deleted
and replaced with the Annex I attached hereto.
Section 3. RATIFICATION. The Borrower hereby ratifies and
confirms all of the Obligations under the Credit Agreement (as
amended hereby) and the Notes. All references to the "Credit
Agreement" shall mean the Credit Agreement as amended hereby and as
the same may be amended, supplemented, restated or otherwise
modified and in effect from time to time in the future.
Section 4. EFFECTIVENESS. The effectiveness of this
Amendment is subject to the condition precedent that: (a) (i) the
Administrative Agent shall have received in form and substance
reasonably satisfactory to the Banks and in such number of
counterparts as may be reasonably requested by the Administrative
Agent, this Amendment executed by the Borrower and each of the
Banks and (ii) an amendment fee of .1% of the Commitment of each
Bank that has executed this Amendment prior to April 23, 1999 and
in regard to which the Agent has notified the Borrower of such
execution, and (b) the Borrower shall have paid all of the
Administrative Agent's reasonable costs and expenses (other than
legal fees and expenses, which shall be payable promptly after
Borrower receives an invoice from counsel to the Administrative
Agent) incurred in connection herewith.
Section 5. REPRESENTATIONS AND WARRANTIES. The Borrower
hereby represents and warrants to the Banks that (a) the execution,
delivery and performance of this Amendment has been duly
authorized by all requisite corporate action on the part of the
Borrower, (b) the Credit Agreement (as amended hereby) constitutes
a valid and legally binding agreement enforceable against the
Borrower in accordance with its terms except, as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar
laws relating to or affecting the enforcement of creditors' rights
generally and by general principles of equity, (c) the
representations and warranties by the Borrower contained in the
Credit Agreement as amended hereby are true and correct on and as
of the date hereof in all material respects as though made as of
the date hereof unless such representation and warranty expressly
indicates that it is being made as of any specific date, in which
case such representations and warranties shall be true and correct
in all material respects as of such date, and except to the extent
that such representations and warranties are no longer true and
correct due to any action or inaction permitted or required to be
taken under the Credit Documents by Borrower or any Subsidiary, and
(d) no Default or Event of Default exists under the Credit
Agreement (as amended hereby).
Section 6. CHOICE OF LAW. THIS AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
Section 7. FINAL AGREEMENT. THE CREDIT AGREEMENT (AS
AMENDED HEREBY) REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL
AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by its officers thereunto duly authorized
as of the date first above written.
ADDRESS: GLOBAL MARINE INC.
777 N. Eldridge Road
Houston, Texas 77079-4416
Telecopy: (281) 596-5826
Telephone: (281) 596-5810 By: /s/ W. Matt Ralls
Attention: W. Matt Ralls W. Matt Ralls
Senior Vice President -
Chief Financial Officer
and Treasurer
BANKERS TRUST COMPANY,
as Administrative Agent
By: /s/ Marcus M. Tarkington
Name: Marcus M. Tarkington
Title: Principal
ABN AMRO BANK, N.V., HOUSTON
AGENCY, Individually and as
Syndication Agent
By: /s/ Stuart Murray
Name: Stuart Murray
Title: Vice President
By: /s/ Deanna Breland
Name: Deanna Breland
Title:Vice President
ARGENTARIA, CAJA POSTAL Y BANCO
HIPOTECARIO, NEW YORK BRANCH
By: /s/ Augusto Godoy
Name: Augusto Godoy
Title: General Manager
BANCO ESPIRITO SANTO E COMMERCIAL
DE LISBOA, NASSAU BRANCH
By: /s/ Andrew M. Orsen
Name: Andrew M. Orsen
Title:Vice President
By: /s/ Terry R. Hull
Name: Terry R. Hull
Title:Senior Vice President
THE BANK OF NOVA SCOTIA
By: /s/ M. D. Smith
Name: M. D. Smith
Title:Agent Operations
THE BANK OF TOKYO - MITSUBISHI,
LTD.
By: /s/ John W. McGhee
Name: John W. McGhee
Title: Vice President & Manager
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Pascal Poupelle
Name: Pascal Poupelle
Title: Executive Vice President
DEN NORSKE BANK ASA, NEW YORK
BRANCH
By: /s/ Barbara Gronquist
Name: Barbara Gronquist
Title: First Vice President
By: /s/ Chr. Tobias Backer
Name: Chr. Tobias Backer
Title: Assistant Vice President
SOCIETE GENERALE, SOUTHWEST AGENCY,
Individually and as Documentation
Agent
By: /s/ Richard A. Gould
Name: Richard A. Gould
Title: Director
TORONTO DOMINION (TEXAS), INC.
By: /s/ Carol Brandt
Name: Carol Brandt
Title: Vice President
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By: /s/ Richard R. Newman
Name: Richard R. Newman
Title:Director
By: /s/Thomas Lee
Name: Thomas Lee
Title: Associate
ANNEX I
Credit Agreement dated as of January 29, 1998
COMMITMENTS
BANK COMMITMENT
Banco Espirito Santo e Commercial de Lisboa,
Nassau Branch $5,000,000
ABN AMRO Bank, N.V., Houston Agency $30,000,000
Argentaria, Caja Postal y Banco Hipotecario,
New York Branch $5,000,000
The Bank of Nova Scotia $10,000,000
The Bank of Tokyo-Mitsubishi, Ltd. $10,000,000
Credit Lyonnais New York Branch $20,000,000
Den norske Bank ASA, New York Branch $15,000,000
Societe Generale, Southwest Agency $30,000,000
Toronto Dominion (Texas), Inc. $15,000,000
WestDeutsche Landesbank Girozentrale,
New York Branch $10,000,000
Total $150,000,000
EXHIBIT 10.7
June 4, 1999
Global Marine Inc.
777 N. Eldridge Parkway
Houston, Texas 77079-4493
Ladies and Gentlemen:
We are pleased to make available to you an uncommitted credit facility
for general corporate purposes on the terms set forth in this letter
(the "LETTER AGREEMENT").
1. We agree to consider from time to time your requests that we
make advances to you, on an interest bearing basis ("ADVANCES"), in an
aggregate amount not to exceed at any one time outstanding the amount
set forth on SCHEDULE I hereto as the "Facility Amount", on the terms
and conditions set forth below. This letter is not a commitment to lend
but rather sets forth the procedures to be used in connection with your
requests for our making of Advances to you from time to time on or
prior to the termination hereof pursuant to PARAGRAPH 10 and, in the
event that we make Advances to you hereunder, your obligations to us
with respect thereto. The Advances shall be evidenced by the "grid"
promissory note executed by you in substantially the form of Exhibit
A hereto (or such other form as may be agreed to between us and you)(as
amended from time to time, the "NOTE").
2. The net amount of each Advance shall be in an amount at least
equal to the amount set forth on SCHEDULE I hereto as the "MINIMUM
ADVANCE AMOUNT" and shall be made upon (i) your request to us by
telephone, telecopy or letter, given by any of the persons listed on
EXHIBIT B hereto or otherwise designated by you in writing ("DESIGNATED
PERSONS"), that you wish to borrow money on a specified date, in a
specified amount and for a specified term (which shall, in no event, be
longer than the number of days set forth on SCHEDULE I hereto as the
"MAXIMUM TERM" (and in any event, no such Advance shall mature after
January 31, 2000); and (ii) our mutual agreement as to such date,
amount and term and as to the interest rate per annum. On the date of
any such Advance, we will make such Advance available to you in same
day funds by transferring or wiring the net proceeds of such Advance to
an account designated in writing by a Designated Person. Promptly after
the date of each Advance, we will send you a written confirmation of
such Advance and the amount and term thereof and the interest rate per
annum.
3. Your agreement and acceptance of this letter, together with
your furnishing to us certified copies of (i) your charter and by-laws
and (ii) resolutions of your board of directors authorizing a
Designated Person to execute this letter and any documents delivered
pursuant hereto and to request Advances, together with specimen
signatures of such Designated Persons, shall constitute a
representation and warranty by you that (a) the execution, delivery and
performance of this letter has been duly authorized by all necessary
corporate action and does not contravene any law, or any contractual or
legal restriction, applicable to you, (b) no authorization or approval
or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for such execution, delivery
and performance or for the making of any Advance and (c) this letter is
your legal, valid and binding obligation, enforceable against you in
accordance with its terms.
4. Each request by you for an Advance shall constitute a
representation and warranty by you, as of the making of such Advance
and giving effect to the application of the proceeds therefrom, that
(i) no payment default has occurred and is continuing under any
agreement or instrument relating to any of your indebtedness for
borrowed money the outstanding principal of which aggregates
$25,000,000 or more, (ii) such Advance when made will constitute your
legal, valid and binding obligation, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights and by the application of
general principles of equity, and (iii) no event has occurred and no
circumstance exists as a result of which the written information which
you have provided to us in connection herewith would include an untrue
statement of a material fact or omit to state any material fact or any
fact necessary to make the statements contained therein, in the light
of the circumstances under which they were made, not misleading.
5. You shall repay each Advance, and pay interest on such
Advance, in accordance with the terms hereof and of the Note.
6. You shall make each payment hereunder and under the Note on
or before 12:00 noon (New York City time) on the day when due in lawful
money of the United States of America to us at Societe Generale, ABA #
026-004-226, A/C 9038973, Ref: Global Marine Inc., in same day funds.
All computations of interest shall be made by us on the basis of a year
of 360 days, for the actual number of days (including the first day but
excluding the last day) elapsed.
7. Subject to the terms of the Note, whenever any payment to be
made hereunder shall be otherwise due on a Saturday, a Sunday or other
day of the year on which banks are required or authorized to close in
New York City, New York (any other day being a "BUSINESS DAY"), such
payment shall be made on the next succeeding Business Day.
8. You agree that you will not apply the proceeds of any Advance
to purchase or carry margin stock within the meaning of Regulations U
and T issued by the Board of Governors of the Federal Reserve System.
9. We shall incur no liability to you in acting upon any
telephone, telecopy, telex or letter request or communication which we
believe in good faith to have been given by a Designated Person or in
otherwise acting in good faith under this letter. Further, all
documents required to be executed in conjunction with Advances under
this letter may be signed by any Designated Person.
10. This letter shall remain in effect until terminated by either
you or us by giving prior written notice of termination hereof to the
other party hereto, but no such termination shall affect your or our
obligations with respect to the Advances hereunder outstanding at the
time of such termination.
11. All written communications hereunder shall be mailed,
telecopied or delivered to the address specified on SCHEDULE I hereto
for you and for us, or as to each party, to such other address as may
be designated by such party in a written notice to the other party.
Written communication shall be effective upon receipt unless such
communication is mailed, in which case it shall be effective three
Business Days after deposit in first class mail.
12. We may assign to one or more banks or other entities all or
any part of, or may grant participations to one or more banks or other
entities in or to all or any part of, any Advance or Advances hereunder
and under the Note; provided that no assignment shall be effective
without our prior written consent which shall not be unreasonably
withheld or delayed. You may not assign your rights or obligations
hereunder or any interest herein without our prior written consent and
any such assignment without our consent shall be null and void.
13. You agree to pay on demand all reasonable out-of-pocket
costs, expenses and losses, if any, incurred by us in connection with
the enforcement of this letter or the Note other than such costs,
expenses or losses arising out of your gross negligence or wilful
misconduct.
14. You agree to furnish us with such financial statements or
other information as we may reasonably request. We agree to keep all
such information confidential and use it solely in connection with the
administration of this Letter Agreement.
15. If any of the following events shall occur and be continuing:
(a) you shall fail to pay any amount due hereunder or under
the Note when the same becomes due and payable; or
(b) any material representation or warranty made by you (or
any of your officers) in connection with any Advance or otherwise
in connection with this letter or the Note shall prove to have
been incorrect in any material respect when made; or
(c) you shall, without our prior written consent, merge or
consolidate with or into, or convey, transfer, lease or dispose of
(whether in one transaction or in a series of transactions) all or
substantially all of your assets to, any person or entity other
than any transaction permitted under the Five-Year Credit
Agreement (as defined below); or
(d) you shall fail to perform or observe any other material
term, covenant or agreement in connection with any Advance or
otherwise in connection with this letter or the Note on your part
to be performed or observed and such failure is not remedied
within 30 days after your receipt of written notice from us; or
(e) any Event of Default occurs and continues as defined in
the Second Amended and Restated Credit Agreement dated as of
December 9, 1997 (as amended from time to time "FIVE-YEAR CREDIT
AGREEMENT") among you, the lending institutions party thereto and
Bankers Trust Company as Administrative Agent; or
(f) you shall fail to pay any principal of or premium or
interest on any indebtedness for borrowed money the outstanding
principal of which aggregates $25,000,000 or more (excluding
indebtedness evidenced by the Note), when the same becomes due and
payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such indebtedness; or any
other event shall occur or condition shall exist under any
agreement or instrument relating to such indebtedness and shall
continue after the receipt of any applicable notice or the expiry
of any applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition
is to accelerate, or to permit the acceleration of, the maturity
of such indebtedness; or any such indebtedness shall be declared
to be due and payable, or required to be prepaid (other than by a
regularly scheduled required payment), prior to the stated
maturity thereof; or
(g) you shall generally not pay your debts as such debts
become due, or shall admit in writing your inability to pay your
debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or
against you seeking to adjudicate you as bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of you or your
debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee,
custodian or other similar official for you or any substantial
part of your property; or you shall take any corporate action to
authorize any of the actions set forth above in this SUBSECTION
(g);
then, and in any such event, we may declare the Note, and all amounts
payable thereunder to be forthwith due and payable, whereupon the Note
and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind all
of which you hereby expressly waive; PROVIDED, HOWEVER, that in the
event of any occurrence described in SUBSECTION (g), the Note and all
such other amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by you. In the event that the Note
becomes due and payable pursuant to this PARAGRAPH 15 you shall also
pay us, in addition to all amounts payable under the Note, to the
extent permitted by law, an amount equal to the positive difference, if
any, for each Advance between (i) the interest that would have accrued
with respect to such Advance under the Note from the date such Advance
was paid to the scheduled maturity date therefor and (ii) the interest
actually earned by us on the amount repaid to us with respect to such
Advance from the date of payment thereof to the scheduled maturity date
for such Advance (the "MAKE-WHOLE AMOUNT").
16. You agree that no amendment or waiver of any provision of
this letter or the Note nor consent to any departure by you therefrom,
shall in any event be effective unless the same shall be in writing and
signed by the you and the undersigned ("BANK"), and then such waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which given.
17. You agree to indemnify the Bank, its officers, directors,
employees, representatives and agents from and discharge, release, and
hold each of them harmless against any and all reasonable losses,
liabilities, obligations, claims, damages, expenses, fines or penalties
incurred by any of them as a result of, or directly arising out of, or
directly related to (a) any actual or proposed used by you or any
subsidiary of the proceeds of the Advances, (b) any breach by you of
any provision of this letter or the Note, (c) any investigation,
litigation or other proceeding (whether or not the Bank is a party
thereto) related to the foregoing, including, but not limited to, the
entering into and/or performance of this letter or the Note, or the use
of proceeds of any Advances hereunder, or (d) any Environmental Claim
(as defined in the Five-Year Credit Agreement) or requirement of
Environmental Laws (as defined in the Five-Year Credit Agreement)
concerning or relating to (i) any Real Property (as defined in the
Five-Year Credit Agreement), offshore drilling rig, facility, or
location which you at any time owned or operated, or (ii) your
operations or business, and you agree to reimburse the Bank and its
directors, officers, employees and agents within 30 days' of demand for
any reasonable out-of-pocket expenses (including outside legal fees)
incurred in connection with any such investigation, litigation or other
proceeding; and expressly including any such losses, liabilities,
claims, damages, or expenses incurred by reason of negligence by such
person seeking indemnification, but excluding any such losses,
liabilities, claims, damages, or expenses incurred by reason of the
gross negligence or willful misconduct of the person seeking
indemnification. To the extent that the undertaking to indemnify, pay
or hold harmless the person seeking indemnification as set forth in the
preceding sentence may be unenforceable because it is violative of any
law or public policy, you agree to make the maximum contribution to the
payment and satisfaction of each of the indemnified liabilities which
is permissible under applicable law.
18. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
19. You and we each hereby irrevocably waive all right to trial
by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) arising out of or relating to this letter
or the Note.
20. As long as you shall have any Advances outstanding, you agree
that you will maintain an unutilized aggregate amount equal to the
amount of all outstanding Advances under (a) the Five-Year Credit
Agreement and (b) any successor or replacement facilities with
financial institutions; PROVIDED that, the commitments relied upon for
determining such availability must remain effective through a date that
is later than January 31, 2000.
If the terms of this letter are satisfactory to you, please
indicate your agreement and acceptance thereof by signing a counterpart
of this letter and returning it to us.
Very truly yours,
SOCIETE GENERALE
By: /S/ Richard A. Gould
Name: Richard A. Gould
Title: Director
Agreed and Accepted:
GLOBAL MARINE INC.
By: /s/ W. Matt Ralls
Name: W. Matt Ralls
Title: Senior Vice President,
Chief Financial Officer
and Treasurer
SCHEDULE I
to Letter Agreement
dated as of June 4, 1999
between SOCIETE GENERALE and GLOBAL MARINE INC.
(i) For the purpose of Sections 1 and 2 of this Letter Agreement:
The "Facility Amount" is $50,000,000.
The "Minimum Advance Amount" is $3,000,000.
The "Maximum Term" is 70 days.
(ii) For the purpose of Section 11 of this Letter Agreement:
The address for written communications to you is:
Global Marine Inc.
777 N. Eldridge Parkway
Houston, Texas 77079-4493
Attention: W. Matt Ralls
Telephone: 281-596-5810
Fax: 281-596-5826
The address for written communications to us is:
Societe Generale
2001 Ross Avenue
Suite 4800
Dallas, TX 75201
Attention: Lia Guerra
Telephone: (214) 979-2769
Fax: (214) 754-0171
(iii)For purposes of this Letter Agreement, instructions for wire
transfer of funds to the Borrower are:
Name of Bank: First Union National Bank - Charlotte, NC
Bank ABA Number: 053 000 219
Borrower Number: 2-000-000-372-037
Reference: Global Marine Inc.
EXHIBIT A
TO THE LETTER AGREEMENT
PROMISSORY NOTE
New York, New York
$ [Date]
FOR VALUE RECEIVED, the undersigned, GLOBAL MARINE INC., a
Delaware company ("BORROWER"), unconditionally promises to pay to
the order of SOCIETE GENERALE (the "Bank") the unpaid principal
amount of each advance made by the Bank to the Borrower, on the
maturity date of such advance as recorded on the grid attached
hereto and made a part hereof; provided that the aggregate
principal amount of all advances at any one time outstanding shall
not exceed [Amount in Words] United States Dollars (US $[ ]).
The Borrower further promises to pay interest (computed for
the actual number of days elapsed on the basis of a year of 360
days) on the principal amount of each advance made hereunder,
commencing on the date hereof until the maturity date of such
advance (as indicated on the grid), at a rate per annum equal to
such percent as is indicated on the grid in excess of the rate
(the "Eurodollar Rate") quoted to the Bank in an off-shore
interbank dollar market selected by the Bank for deposits in U.S.
Dollars in an amount similar to the principal amount of such
advance for a period commencing on the date of the making of such
advance and ending on the maturity date of such advance (the
"Interest Period"). Interest shall be payable on the last day of
an Interest Period, on any date on which the advance or this
promissory note is prepaid and on the due date for the payment of
principal (whether the stated maturity date of such advance, upon
acceleration or otherwise). The Borrower agrees that in the event
that any principal amount of such advance is not paid on the date
when due (whether the stated maturity date of such advance, upon
acceleration or otherwise), the Borrower shall pay interest
thereon on demand at a rate equal to 2 percent per annum above the
Federal Funds Rate as in effect from time to time, which interest
rate shall change when and as the Federal Funds Rate changes.
"Federal Funds Rate" means the rate for overnight Federal Funds,
as published by the Federal Reserve Bank of New York.
The Borrower may prepay the outstanding principal amount of
any advance in whole or in part at any time, without premium or
penalty upon not less than two Business Days notice to the Bank.
Any such prepayment shall be accompanied by accrued but unpaid
interest on the principal amount so prepaid. In the event that the
Borrower makes any repayment or prepayment in respect of any
advance other than on the last day of an Interest Period, the
Borrower shall forthwith pay to the Bank such additional amount as
shall be necessary to compensate the Bank for any actual out-of-
pocket loss or expense sustained or incurred by reason of the
liquidation of reemployment of deposits or other funds acquired by
the Bank in order to fund the amount of such advance which is then
being repaid or prepaid. The Borrower shall pay all such costs,
losses and expenses upon the delivery to it by the Bank of a
certificate setting forth such reasonable additional amounts. Such
certificate shall include all calculations used to determine such
additional amounts and shall be binding on the Borrower and the
Bank absent demonstrable error.
In the event that any change in any applicable law or
regulation or in the interpretation thereof by any governmental
authority shall make it unlawful for the Bank to make or maintain
any advance evidenced by this promissory note, the Borrower shall,
upon notice to such effect from the Bank, repay to the Bank within
30 days the aggregate unpaid principal amount of such advance,
together with accrued and unpaid interest thereon. The Borrower
shall also pay to the Bank all reasonable costs incurred by the
Bank in connection with such prepayment and compensate the Bank
for any actual out-of-pocket loss suffered by the Bank by reason
of such prepayment's not being made on the last day of an Interest
Period.
If any reserve, special deposit or similar requirement shall
be imposed against any assets of the Bank, any deposits with the
Bank or for the Bank's account, or any credit extended by the
Bank, or the Bank shall be subject to any tax, duty or other
charge (excluding taxes payable on income or gross receipts), in
each case, resulting from any advance evidenced by this promissory
note, then at the Bank's reasonable discretion the interest rate
applicable to such advance shall be subject to upward adjustment
to compensate the Bank for the cost (as reasonably determined by
the Bank) of complying with the foregoing. In the event of such
adjustment, the Borrower shall have the right to prepay the unpaid
principal amount of such advance, together with accrued and unpaid
interest thereon. The Borrower shall pay to the Bank all
reasonable costs incurred in connection with such prepayment and
compensate the Bank for any loss suffered by reason of such
prepayment's not being made on the last day of an Interest Period.
Bank agrees to request compensation within 180 days of incurring
any amounts described in the two foregoing paragraphs or agrees to
waive its rights to compensation.
All payments of principal of and interest payable under this
promissory note shall be made by the Borrower not later than 12:00
noon (New York time) on the date when due to the Bank at its
office located on the date hereof at 1221 Avenue of the Americas,
New York, New York 10020 in lawful money of the United States of
America, in immediately available funds without setoff, deduction
or counterclaim and free and clear of any present or future taxes,
levies, imposts, duties, fees, assessments or other charges
(excluding taxes payable on income or gross receipts). If any day
on which a payment is due hereunder is not a business day, which
for purposes of this promissory note shall mean a day other than
Saturday or Sunday or other than a day on which commercial banks
in New York City are authorized or required to close, then such
payment shall be due on the following business day and such
additional time shall be included in the calculation of interest.
The Borrower agrees to pay reasonable costs of collection
(including reasonable legal fees and disbursements of counsel) if
default is made in the payment of the principal of or interest on
this promissory note.
The Borrower hereby irrevocably submits to the non-exclusive
jurisdiction of any United States Federal or New York State court
sitting in New York City in any action or proceeding arising out
of or relating to this promissory note, and hereby consents that
personal jurisdiction over the Borrower may be obtained by mailing
a summons to the Borrower by registered mail or certified mail,
return receipt requested, within or without such court's
jurisdiction, or by personal service, provided a reasonable time
for appearance is allowed. The Borrower hereby waives all
objections as to venue, inconvenient forum and the like. The
Borrower hereby waives trial by jury in any legal proceeding
arising out of or relating to this promissory note.
Presentment, demand, protest and notices of any kind with
respect to this promissory note are hereby expressly waived by the
Borrower.
The Promissory Note is the "grid" promissory note referred to
in, and is entitled to the benefits of the Letter Agreement dated
June 4, 1999 (as amended from time to time, the "Letter
Agreement"), between Borrower and the Bank, which Letter
Agreement, among other things, sets forth procedures to be used in
connection with the Borrower's periodic requests that the Bank
make advances to it.
This promissory note shall be governed by and construed in
accordance with the laws of the State of New York.
GLOBAL MARINE INC.
By:
Name:
Title:
GRID
Amount Maturity Interest Rate
Date of of of of Notation Made
Advance Advance Advance Advance By
EXHIBIT B
TO LETTER AGREEMENT
For the purpose of Section 2 of this Letter Agreement, the
"DESIGNATED PERSONS" are:
NAME TITLE
W. Matt Ralls Senior Vice President, Chief Financial Officer
and Treasurer
William H. Gammerdinger Assistant Treasurer
Thomas R. Johnson Vice President and Corporate Controller
James McCullouch Senior Vice President and General Counsel
EXHIBIT 10.8
June 4, 1999
Global Marine Inc.
777 N. Eldridge Parkway
Houston, Texas 77079-4493
Ladies and Gentlemen:
We are pleased to make available to you an uncommitted credit facility
for general corporate purposes on the terms set forth in this letter
("LOAN AGREEMENT").
1. We agree to consider from time to time your requests that we
make advances to you, on either an interest bearing or a discount basis
("ADVANCES"), in an aggregate amount not to exceed at any one time
outstanding the amount set forth on SCHEDULE I hereto as the "Facility
Amount", on the terms and conditions set forth below. This letter is
not a commitment to lend but rather sets forth the procedures to be
used in connection with your requests for our making of Advances to
you from time to time on or prior to the termination hereof pursuant to
PARAGRAPH 10 and, in the event that we make Advances to you hereunder,
your obligations to us with respect thereto. The Advances shall be
evidenced by the "grid" promissory note executed by you in
substantially the form of EXHIBIT A hereto (as amended from time to
time, the "NOTE").
2. The net amount of each Advance shall be in an amount at least
equal to the amount set forth on SCHEDULE I hereto as the "MINIMUM
ADVANCE AMOUNT" and shall be made upon (i) your request to us by
telephone, telecopy or letter, given by any of the persons listed on
EXHIBIT B hereto or otherwise designated by you in writing ("DESIGNATED
PERSONS"), that you wish to borrow money on a specified date, in a
specified amount and for a specified term (which shall, in no event, be
longer than the number of days set forth on SCHEDULE I hereto as the
"MAXIMUM TERM" (and in any event, no such Advance shall mature after
January 31, 2000); and (ii) our mutual agreement as to such date,
amount and term and as to the interest rate per annum or, in the case
of an Advance made on a discount basis, discount applicable to any such
Advance. On the date of any such Advance, we will make such Advance
available to you in same day funds by directing our managing agent to
transfer or wire the net proceeds of such Advance to an account
designated in writing by a Designated Person. Promptly after the date
of each Advance, our managing agent will send you a written
confirmation of such Advance and the amount and term thereof and the
interest rate per annum or, in the case of an Advance made on a
discount basis, discount applicable thereto.
3. Your agreement and acceptance of this letter, together with
your furnishing to us certified copies of (i) your charter and by-laws
and (ii) resolutions of your board of directors authorizing a
Designated Person to execute this letter and any documents delivered
pursuant hereto and to request Advances, together with specimen
signatures of such Designated Persons, shall constitute a
representation and warranty by you that (a) the execution, delivery and
performance of this letter has been duly authorized by all necessary
corporate action and does not contravene any law, or any contractual or
legal restriction, applicable to you, (b) no authorization or approval
or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for such execution, delivery
and performance or for the making of any Advance and (c) this letter is
your legal, valid and binding obligation, enforceable against you in
accordance with its terms.
4. Each request by you for an Advance shall constitute a
representation and warranty by you, as of the making of such Advance
and giving effect to the application of the proceeds therefrom, that
(i) no payment default has occurred and is continuing under any
agreement or instrument relating to any of your indebtedness for
borrowed money the outstanding principal of which aggregates
$25,000,000 or more, (ii) such Advance when made will constitute your
legal, valid and binding obligation, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights and by the application of
general principles of equity, and (iii) no event has occurred and no
circumstance exists as a result of which the written information which
you have provided to us in connection herewith would include an untrue
statement of a material fact or omit to state any material fact or any
fact necessary to make the statements contained therein, in the light
of the circumstances under which they were made, not misleading.
5. You shall repay each Advance, and in the case of an Advance
made on an interest bearing basis shall pay interest on such Advance,
in accordance with the terms hereof and of the Note. You shall have no
right to prepay any unpaid principal amount of any Advance unless you
pay us the Make-Whole Amount (as defined in paragraph 15 of this
letter).
6. You shall make each payment hereunder and under the Notes on
or before 12:00 noon (New York City time) on the day when due in lawful
money of the United States of America to us at Societe Generale, New
York, ABA # 026-004-226, A/C 9038973, R/E Altair, in same day funds.
All computations of interest shall be made by us on the basis of a year
of 360 days, for the actual number of days (including the first day but
excluding the last day) elapsed.
7. Whenever any payment to be made hereunder shall be otherwise
due on a Saturday, a Sunday or other day of the year on which banks are
required or authorized to close in New York City, New York (any other
day being a "BUSINESS DAY"), such payment shall be made on the next
succeeding Business Day.
8. You agree that you will not apply the proceeds of any Advance
to purchase or carry margin stock within the meaning of Regulations U
and T issued by the Board of Governors of the Federal Reserve System.
9. We shall incur no liability to you in acting upon any
telephone, telecopy, telex or letter request or communication which we
believe in good faith to have been given by a Designated Person or in
otherwise acting in good faith under this letter. Further, all
documents required to be executed in conjunction with Advances under
this letter may be signed by any Designated Person.
10. This letter shall remain in effect until terminated by either
you or us by giving prior written notice of termination hereof to the
other party hereto, but no such termination shall affect your or our
obligations with respect to the Advances hereunder outstanding at the
time of such termination.
11. All written communications hereunder shall be mailed,
telecopied or delivered to the address specified on SCHEDULE I hereto
for you and for us, or as to each party, to such other address as may
be designated by such party in a written notice to the other party.
Written communication shall be effective upon receipt unless such
communication is mailed, in which case it shall be effective three
Business Days after deposit in first class mail.
12. We may assign to one or more banks or other entities all or
any part of, or may grant participations to one or more banks or other
entities in or to all or any part of, any Advance or Advances hereunder
and under the Note. You may not assign your rights or obligations
hereunder or any interest herein without our prior written consent and
the written confirmation from each of the Rating Agencies that as a
result of such assignment the then current rating of the commercial
paper issued by us will not be downgraded or withdrawn and any such
assignment without our consent shall be null and void.
13. You agree to pay on demand all reasonable out-of-pocket
costs, expenses and losses, if any, incurred by us in connection with
the enforcement of this letter or the Note other than such costs,
expenses or losses arising out of your gross negligence or wilful
misconduct.
14. You agree to furnish us with such financial statements or
other information as we may reasonably request. We agree to keep all
such information confidential and use it solely in connection with the
administration of this Loan Agreement.
15. If any of the following events shall occur and be continuing:
(a) you shall fail to pay any amount due hereunder or under
the Note when the same becomes due and payable; or
(b) any material representation or warranty made by you (or
any of your officers) in connection with any Advance or otherwise
in connection with this letter or the Note shall prove to have
been incorrect in any material respect when made; or
(c) you shall, without our prior written consent, merge or
consolidate with or into, or convey, transfer, lease or dispose of
(whether in one transaction or in a series of transactions) all or
substantially all of your assets to, any person or entity other
than in any transaction permitted under the Five-Year Credit
Agreement (as defined below); or
(d) you shall fail to perform or observe any other material
term, covenant or agreement in connection with any Advance or
otherwise in connection with this letter or the Note on your part
to be performed or observed and such failure is not remedied
within 30 days after your receipt of written notice from us; or
(e) any Event of Default occurs and continues as defined in
the Second Amended and Restated Credit Agreement dated as of
December 9, 1997 (as amended from time to time "FIVE-YEAR CREDIT
AGREEMENT") among you, the lending institutions party thereto and
Bankers Trust Company as Administrative Agent; or
(f) you shall fail to pay any principal of or premium or
interest on any indebtedness for borrowed money the outstanding
principal of which aggregates $25,000,000 or more (excluding
indebtedness evidenced by the Note), when the same becomes due and
payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such indebtedness; or any
other event shall occur or condition shall exist under any
agreement or instrument relating to such indebtedness and shall
continue after the receipt of any applicable notice or expiry of
any applicable grace period, if any, specified in such agreement
or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such
indebtedness; or any such indebtedness shall be declared to be due
and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity
thereof; or
(g) you shall generally not pay your debts as such debts
become due, or shall admit in writing your inability to pay your
debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or
against you seeking to adjudicate you as bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of you or your
debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee,
custodian or other similar official for you or any substantial
part of your property; or you shall take any corporate action to
authorize any of the actions set forth above in this SUBSECTION
(g);
then, and in any such event, we may declare the Note, and all amounts
payable thereunder to be forthwith due and payable, whereupon the Note
and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind all
of which you hereby expressly waive; PROVIDED, HOWEVER, that in the
event of any occurrence described in SUBSECTION (g), the Note and all
such other amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by you. In the event that the Note
becomes due and payable pursuant to this PARAGRAPH 15, you shall also
pay us, in addition to all amounts payable under the Note, to the
extent permitted by law, an amount equal to the positive difference, if
any, for each Advance between (i) the interest that would have accrued
with respect to such Advance under the Note from the date such Advance
was paid to the scheduled maturity date therefor and (ii) the interest
actually earned by us on the amount repaid to us with respect to such
Advance from the date of payment thereof to the scheduled maturity date
for such Advance (the "MAKE-WHOLE AMOUNT").
16. You agree that no amendment or waiver of any provision of
this letter or the Note nor consent to any departure by you therefrom,
shall in any event be effective unless the same shall be in writing and
signed by the you and the undersigned ("LENDER"), and then such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given.
17. You agree to indemnify the Lender, its officers, directors,
employees, representatives and agents from and discharge, release, and
hold each of them harmless against any and all reasonable losses,
liabilities, obligations, claims, damages, expenses, fines or penalties
incurred by any of them as a result of, or directly arising out of, or
directly related to (a) any actual or proposed use by you or a
subsidiary of the proceeds of the Advances, (b) any breach by you of
any provision of this letter or the Note, (c) any investigation,
litigation or other proceeding (whether or not the Lender is a party
thereto) related to the foregoing, including, but not limited to, the
entering into and/or performance of this letter or the Note, or the use
of proceeds of any Advances hereunder, or (d) any Environmental Claim
(as defined in the Five-Year Credit Agreement) or requirement of
Environmental Laws (as defined in the Five-Year Credit Agreement)
concerning or relating to (i) any Real Property (as defined in the
Five-Year Credit Agreement), offshore drilling rig, facility, or
location which you at any time owned or operated, or (ii) your
operations or business, and you agree to reimburse the Lender and its
directors, officers, employees and agents within 30 days' of demand for
any reasonable out-of-pocket expenses (including outside legal fees)
incurred in connection with any such investigation, litigation or other
proceeding; and expressly including any such losses, liabilities,
claims, damages, or expenses incurred by reason of negligence by such
person seeking indemnification, but excluding any such losses,
liabilities, claims, damages, or expenses incurred by reason of the
gross negligence or willful misconduct of the person seeking
indemnification. To the extent that the undertaking to indemnify, pay
or hold harmless the person seeking indemnification as set forth in the
preceding sentence may be unenforceable because it is violative of any
law or public policy, you agree to make the maximum contribution to the
payment and satisfaction of each of the indemnified liabilities which
is permissible under applicable law.
18. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
19. You and we each hereby irrevocably waive all right to trial
by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) arising out of or relating to this letter
or the Note.
20. You agree that you will not institute against or join any
other person in instituting against us any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other proceeding
under any federal or state bankruptcy or similar law, for one year and
a day after the latest maturing commercial paper issued by us is paid
in full.
21. At our option, we shall, upon notice that either Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc.,
or Moody's Investor Service, Inc. has (i) lowered or downgraded its
short term commercial paper or corporate bond or other short term
rating of you, (ii) placed your securities on a watch list of
securities singled out for surveillance, with either negative or
developing implications or (iii) withdrawn its approval of you for
inclusion in a Ratings Category (as defined in the Loan Referral
Agreement, dated as of January 31, 1997, between us and Societe
Generale), amend SCHEDULE I hereof to provide for an amended "Facility
Amount" and amended "Maximum Term".
22. As long as you shall have any Advances outstanding, you agree
that you will maintain an unutilized aggregate amount equal to the
amount of all outstanding Advances under (a) the Five-Year Credit
Agreement, (b) any successor or replacement facilities with financial
institutions; PROVIDED that, the commitments relied upon for
determining such availability must remain effective through a date that
is later than January 31, 2000.
23. Our obligations under this Agreement are solely our corporate
obligations. No recourse shall be had for the payment of any amount
owing by us hereunder or any other obligation or claim of or against us
arising out of or based upon this Agreement against any of our
stockholders, employees, officers, directors or incorporators.
If the terms of this letter are satisfactory to you, please
indicate your agreement and acceptance thereof by signing a counterpart
of this letter and returning it to us.
Very truly yours,
ALTAIR FUNDING CORPORATION
By: /s/ Juliana C. Johnson
Juliana C. Johnson
Vice President
Agreed and Accepted:
GLOBAL MARINE INC.
By: /s/ W. Matt Ralls
Name: W. Matt Ralls
Title: Senior Vice President,
Chief Financial Officer
and Treasurer
SCHEDULE I
to Loan Agreement
dated as of June 4, 1999
between ALTAIR FUNDING CORPORATION and
GLOBAL MARINE INC.
(i) For the purpose of Sections 1 and 2 of this Loan Agreement:
The "Facility Amount" is $50,000,000.
The "Minimum Advance Amount" is $3,000,000.
The "Maximum Term" is 70 days.
(ii) For the purpose of Section 11 of this Loan Agreement:
The address for written communications to you is:
Global Marine Inc.
777 N. Eldridge Parkway
Houston, Texas 77079-4493
Attention: W. Matt Ralls
Telephone: 281-596-5810
Fax: 281-596-5826
The address for written communications to us is:
Altair Funding Corp. c/o Societe Generale
181 West Madison Suite 3400
Chicago Illinois, 60602
Attention: Debbie Sampson
Telephone: 312-578-5165
Fax: 312-578-5199
(iii) For purposes of this Loan Agreement, instructions for wire
transfer of funds to the Borrower are:
Name of Bank: First Union National Bank - Charlotte, NC
Bank ABA Number: 053 000 219
Borrower Number: 2000-000-372-037
Reference: Global Marine Inc.
EXHIBIT A
to
The Loan Agreement
FORM OF SHORT-TERM PROMISSORY GRID NOTE
$ Dated , 199
FOR VALUE RECEIVED, the undersigned (the "BORROWER"), HEREBY
PROMISES TO PAY to the order of Altair Funding Corporation (the
"LENDER") with respect to each Advance (as defined below):
(a) in the case of an Advance made on an interest bearing
basis, the principal amount of such Advance made by the Lender to
the Borrower, on the date mutually agreed to by the Lender and the
Borrower at the time of such Advance as the maturity date thereof,
together with interest (computed on the basis of a year of 360
days for the actual number of days, including the first day but
excluding the last day, elapsed) on the principal amount of each
Advance outstanding from time to time from and including the date
on which such Advance is made until the maturity date of such
Advance, at an interest rate per annum, mutually agreed to by the
Lender and the Borrower at the time of such Advance, payable on
the maturity date of such Advance; and
(b) in the case of each Advance made by the Lender to the
Borrower, on a discount basis mutually agreed by the Lender and
the Borrower at the time of such Advance, the stated or face
amount of such Advance, on the date mutually agreed to by the
Lender and the Borrower at the time of such Advance as the
maturity date thereof.
Any overdue principal amount and overdue amount of interest, fees or
other amounts payable hereunder or under the Loan Agreement referred to
below shall bear interest, payable on demand, at a fluctuating interest
rate per annum equal at all times to 2 percent (2%) per annum above the
Federal Funds Rate as in effect from time to time, which interest rate
shall change when and as the Federal Funds Rate changes. "Federal
Funds Rate" means the rate for overnight Federal Funds, as published by
the Federal Reserve Bank of New York.
The Borrower shall have no right to prepay any unpaid principal
amount of any Advance unless the Borrower pays to the Lender the Make-
Whole Amount (as defined in the Loan Agreement referred to below).
The Borrower shall make each payment of principal and interest
hereunder prior to 12:00 noon (New York City time) on the day when due
in lawful money of the United States of America to Societe Generale,
New York, ABA # 026-004-226, A/C 9038973, R/E Altair, in same day
funds. Whenever any payment to be made hereunder shall be otherwise due
on a day other than a Business Day (as defined in the Loan Agreement
referred to below), such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included
in the computation of payment of interest.
The Borrower hereby authorizes the Lender to endorse on the grid
attached hereto the date and amount of each Advance made by the Lender
to the Borrower hereunder, the maturity date thereof, all payments made
on account of principal thereof and the interest rate applicable
thereto, PROVIDED that the failure to do so shall not affect the
obligations of the Borrower to the Lender.
The Borrower also agrees to pay on demand all reasonable costs and
expenses (including reasonable fees and expenses of counsel) incurred
by the Lender in enforcing this Promissory Note.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
The Borrower and the Lender hereby irrevocably waive all right to
trial by jury in any action, proceeding or counterclaim (whether based
upon contract, tort or otherwise) arising out of or relating to this
Promissory Note or any Advances hereunder.
This Promissory Note is the "grid" promissory note referred to in,
and is entitled to the benefits of, the Loan Agreement dated June 4,
1999 (as amended from time to time, the "LOAN AGREEMENT"), between the
Borrower and the Lender, which Loan Agreement, among other things, sets
forth procedures to be used in connection with the Borrower's periodic
requests that the Lender make advances (the "ADVANCES") to it from time
to time in an aggregate amount not to exceed at any time outstanding
the amount first above mentioned.
GLOBAL MARINE INC.
By:
Name:
Title:
EXHIBIT B
to
the Loan Agreement
For the purpose of Section 2 of this Loan Agreement, the
"DESIGNATED PERSONS" are:
NAME TITLE
W. Matt Ralls Senior Vice President, Chief Financial Officer
and Treasurer
William H. Gammerdinger Assistant Treasurer
Thomas R. Johnson Vice President and Corporate Controller
James McCullouch Senior Vice President and General Counsel
SHORT-TERM PROMISSORY GRID NOTE
$50,000,000.00 Dated June 4, 1999
FOR VALUE RECEIVED, the undersigned (the "BORROWER"), HEREBY
PROMISES TO PAY to the order of Altair Funding Corporation (the
"LENDER") with respect to each Advance (as defined below):
(a) in the case of an Advance made on an interest bearing
basis, the principal amount of such Advance made by the Lender to
the Borrower, on the date mutually agreed to by the Lender and the
Borrower at the time of such Advance as the maturity date thereof,
together with interest (computed on the basis of a year of 360
days for the actual number of days, including the first day but
excluding the last day, elapsed) on the principal amount of each
Advance outstanding from time to time from and including the date
on which such Advance is made until the maturity date of such
Advance, at an interest rate per annum, mutually agreed to by the
Lender and the Borrower at the time of such Advance, payable on
the maturity date of such Advance; and
(b) in the case of each Advance made by the Lender to the
Borrower, on a discount basis mutually agreed by the Lender and
the Borrower at the time of such Advance, the stated or face
amount of such Advance, on the date mutually agreed to by the
Lender and the Borrower at the time of such Advance as the
maturity date thereof.
Any overdue principal amount and overdue amount of interest, fees or
other amounts payable hereunder or under the Loan Agreement referred to
below shall bear interest, payable on demand, at a fluctuating interest
rate per annum equal at all times to 2 percent (2%) per annum above the
Federal Funds Rate as in effect from time to time, which interest rate
shall change when and as the Federal Funds Rate changes. "Federal
Funds Rate" means the rate for overnight Federal Funds, as published by
the Federal Reserve Bank of New York.
The Borrower shall have no right to prepay any unpaid principal
amount of any Advance unless the Borrower pays to the Lender the Make-
Whole Amount (as defined in the Loan Agreement referred to below).
The Borrower shall make each payment of principal and interest
hereunder prior to 12:00 noon (New York City time) on the day when due
in lawful money of the United States of America to Societe Generale,
New York, ABA # 026-004-226, A/C 9038973, R/E Altair, in same day
funds. Whenever any payment to be made hereunder shall be otherwise due
on a day other than a Business Day (as defined in the Loan Agreement
referred to below), such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included
in the computation of payment of interest.
The Borrower hereby authorizes the Lender to endorse on the grid
attached hereto the date and amount of each Advance made by the Lender
to the Borrower hereunder, the maturity date thereof, all payments made
on account of principal thereof and the interest rate applicable
thereto, PROVIDED that the failure to do so shall not affect the
obligations of the Borrower to the Lender.
The Borrower also agrees to pay on demand all reasonable costs and
expenses (including reasonable fees and expenses of counsel) incurred
by the Lender in enforcing this Promissory Note.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
The Borrower and the Lender hereby irrevocably waive all right to
trial by jury in any action, proceeding or counterclaim (whether based
upon contract, tort or otherwise) arising out of or relating to this
Promissory Note or any Advances hereunder.
This Promissory Note is the "grid" promissory note referred to in,
and is entitled to the benefits of, the Loan Agreement dated June 4,
1999 (as amended from time to time, the "LOAN AGREEMENT"), between the
Borrower and the Lender, which Loan Agreement, among other things, sets
forth procedures to be used in connection with the Borrower's periodic
requests that the Lender make advances (the "ADVANCES") to it from time
to time in an aggregate amount not to exceed at any time outstanding
the amount first above mentioned.
GLOBAL MARINE INC.
By:
Name:
Title:
GRID
Interest Rate
on
or Rate of Discounted
Amount Maturity Discount of Amount of
Date of of of Advance (as Advance (if Notion Made
Advance Advance Advance applicable) applicable) By
EXHIBIT 15.1
ACCOUNTANTS' AWARENESS LETTER
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Global Marine Inc. Registration Statements
We are aware that our report dated August 10, 1999, on our review of
the condensed consolidated interim financial information of Global
Marine Inc. and subsidiaries for the three and six months ended June 30,
1999, and included in this Quarterly Report on Form 10-Q is incorporated
by reference in (i) the prospectus constituting part of the Company's
Registration Statements on Form S-8 (Registration Nos. 33-32088, 33-40961,
and 33-63326), respectively, for the Global Marine Inc. 1989 Stock Option
and Incentive Plan and the Global Marine 1998 Stock Option and Incentive
Plan, (ii) the prospectus constituting part of the Company's Registration
Statement on Form S-8 (Registration No. 333-80383) for the Global Marine
1998 Stock Option and Incentive Plan, (iii) the prospectus constituting
part of the Company's Registration Statement on Form S-8 (Registration
No. 33-40266) for the Global Marine Savings Incentive Plan, (iv) the
prospectus constituting part of the Company's Registration Statement on
Form S-8 (Registration No. 33-40961) for the Global Marine Inc. 1990
Non-Employee Director Stock Option Plan, (v) the prospectus constituting
part of the Company's Registration Statement on Form S-8 (Registration
No. 33-57691) for the Global Marine Inc. 1994 Non-Employee Stock Option
and Incentive Plan, and (vi) the combined prospectus constituting part
of the Company's Registration Statements on Form S-3 (Registration
Nos. 33-58577 and 333-49807) for the proposed offering of up to
$500,000,000 of debt securities, preferred stock, and/or common stock.
Pursuant to Rule 436(c) under the Securities Act of 1933, this report
should not be considered a part of any of said registration statements
prepared or certified by us within the meaning of Sections 7 and 11 of
that Act.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
August 12, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated balance sheet of Global Marine Inc. and subsidiaries
as of 6-30-99 and the related condensed consolidated statement of operations
for the six months ended 6-30-99, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 19,100
<SECURITIES> 0
<RECEIVABLES> 126,000
<ALLOWANCES> 4,500
<INVENTORY> 0
<CURRENT-ASSETS> 169,600
<PP&E> 2,085,400
<DEPRECIATION> 436,600
<TOTAL-ASSETS> 2,004,500
<CURRENT-LIABILITIES> 117,400
<BONDS> 595,700
0
0
<COMMON> 17,400
<OTHER-SE> 1,092,600
<TOTAL-LIABILITY-AND-EQUITY> 2,004,500
<SALES> 2,400
<TOTAL-REVENUES> 423,700
<CGS> 2,500
<TOTAL-COSTS> 312,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,000
<INCOME-PRETAX> 84,200
<INCOME-TAX> 19,200
<INCOME-CONTINUING> 65,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 65,000
<EPS-BASIC> 0.37
<EPS-DILUTED> 0.37
</TABLE>
